Market Equilibration Process

Market Equilibration Process

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ECO/561

October --, 2013

Market Equilibration Process

Businesses are bound to the law of supply and demand. Creating a unique product of service for consumers is one way businesses create demand for their services and products. Supply is controlled by the business to regulate the price of a given service or product by the level of demand that can be created around the service or product. In different seasons or periods throughout the year business know that the natural curve of demand will rise and fall based on need and created sense of need for the service or product. Marketing helps businesses with the created sense of need for the service or product with consumers. Each aspect of the supply and demand law creates an equilibration change in the market for a given service or product (McConnell, Brue, & Flynn, 2009).

Market Condition

I am partial owner of a construction company. This sets me in a distinct position to see the supply and demand law in action in a saturated market. With the economic collapse and soft housing market after the 2008 Housing bubble, construction in the area started slowing quickly. Though new construction in my area never stopped the demand quickly plummeted. In theory efficient markets will regulate themselves withstanding outside influence creating a equalization of supply and demand at a price point for the market.

Demand

Demand for resources from organizations by households fluctuates in every market (McConnell, Brue, & Flynn, 2009). Demand without supply creates shortages. Many construction companies that compete for business in the area, with the economic downturn creating a stalling effect on the industry in my location. These factors take away from the demand that my company has for work. In higher demand times business can charge more per worker and trade to create a better profit on larger jobs. When the demand falls we have to lower the charge per worker and trade...