Market Equal.

Marketing Equilibrium Process

Market Equilibrium Process

As the demand and supply of a product shifts so does the effect on many other factors. Equilibrium is reached when there is balance between the supply and demand. The definition of Market Equilibrium Process is the, “Situation where the supply of an item is exactly equal to its demand. Since neither there is surplus nor shortage in the market, there is no innate tendency for the price of the item to change,” (Business Dictionary, 2010).

As the holiday’s approach there are many examples that correlate with the market equilibrium process. During Valentines, Easter, Halloween, and Christmas production and sale of chocolate and candies are at an all time high. Another example of seasonal products includes the sales of various special occasion cards and wrapping paper. These products are prevalently available closer to the holidays and suppliers only tend to carry large quantities of seasonal merchandise during these times. It does not make any sense as a distributor to have a supply of Christmas trees at Easter. As the consumer’s demand for a product increases so does the distributor’s level of inventory for these particular products. After particular holiday’s the consumer’s need or want for a seasonal product decrease. Many times directly after a holiday a distributor will find that their inventory has not been depleted. Suppliers of these products tend to cut price and have to offer a discount for merchandise after the holidays when the demand for these items decrease. Lowering the price of these products will result in the supplier’s price for a particular product to become closer to the market’s equilibrium. As the demand for a product increase so will its price, supply and production. The level of supply for a product impacts the level of a product’s equilibrium. Prices on a product will increase as the supplies lowers and as the supply of a...