Market Equilibrium Process

The concept of Market Equilibrium is where the conditions of supply and demand in a perfectly competitive market are equal. That is, price is set that is appropriate or satisfactory to consumers and suppliers are producing at a rate that ensures adequate access to the product so there is no fluctuation or decrease in price. Price remains stable and the number of products supplied is adequate.

In the real world we could suggest that movie ticket prices are at or near equilibrium. The cost of movie tickets may change every five years or so and may have some regional affect based on the cost of living, but for the most part movie ticket costs remain constant. As the movie attendance is a pretty competitive industry, limiting the numbers of movie theaters to services communities however the prices of movie tickets remain pretty flat. Even in the environment of a big movie premier such as a Harry Potter or Twilight premier, movie ticket prices and access to a theatres or demand, remain stable. This shows that the sellers and buyers intentions are somewhat matched in that the cost of a movie and the value of that movie product along with the availability of theaters and access to the movie are consistent.

One thing to consider in the advent of the digital age is the access of movies online to actual movie attendance in theaters. There has been no analysis to determine a significant impact in movie goers. This might be attributed to the social aspect of movie attendance and therefore digital movies may have limited impact.

Another example of market equilibrium may exist with the average price of generic canned goods in the grocery store. While crops may freeze and spoil, the availability and cost of canned goods remain consistent with supply offered by grocers. There is rarely consumer complaint with the cost of canned good, whether canned meats such as tuna or caned vegetables, like string beans.