Market Equilibrating Process Paper

RUNNING HEAD: MARKET EQUILIRATING PROCESS PAPER

Market Equilibrating Process Paper

Tina Smith

ECO/561- Economics

University of Phoenix

Sadu Shetty

October 11, 2010

Market Equilibrating Process

The processes of the supply side economics with demand side economic forces. In between is equilibrium. Finding equilibrium in the market is the same as finding equilibrium in a person every day life. Before a person can find equilibrium it is important to understand the demand and supply of a product. Natural disasters or man made disasters can lead to increase the necessity of a product. As of this moment Wendy’s restaurants are developing some difficulties obtaining tomatoes. Because the bad weather a couple months ago, the tomato crops became damaged and the tomatoes supplies are running low and Wendy’s cannot produce enough to cover the current demand for tomatoes.

Because of the shortage on the supply of tomatoes the price on tomatoes has been increasing. Because of this price increase Wendy’s fast food restaurants have decided to stop offering this produce on their burgers until further notice. Equilibrium price the common ground for a buyer and a seller. Same scenario happened with strawberries because of the bad weather the farmer’s crops became damaged and by the crops being damaged this will force the farmers to increase the price on strawberries. The prices became noticeable at the grocery store to increase prices. Consumers choose not to pay the high prices meaning that the supply of strawberries will increase and may ruin. A business may choose to lower the prices before the produce ruins even if this means the company may not make a profit.

If a consumer is willing to pay the high prices for the produce the market will become competitive and the business will start making different strategies to allure consumers in the company’s direction. This competition will start bringing the prices of the produce...