Equilibrating Process Paper

Individuals act in their own self-interest. We are rational and try to do things we like and avoid once we do not like. We do make what we might call common usage mistakes. A person may buy a car that turns out to be a lemon or marry someone we do not like but we assume that the person thought the decision was wise at the time, given the available information. We are all aware that there is no such thing as free lunch and what come into our minds when we say that is with the implication that everything has a cost. Even air is not free, having clean air means restricting the emissions of automobiles and other activity that causes pollution the same is true for water. The operation of the market depends on the interaction between suppliers and demanders. Market equilibrium exists when quantity supplied is equal to quantity demanded. Producers are supplying to gain profit therefore they are operating along the demand and supply behavior in the market to meet their business demands. Despite the technological advances such as improved crop varieties and irrigation systems, weather and climate are still key factors in agricultural productivity.

There are a number of factors that affect the demand and supply of a product. The level of demand is determined by factors other than price, for example the level of incomes, tastes and advertising levels. A shift in the curve occurs when a factor other than price changes causing a change in the level of supply or demand at every price. So no matter what the price is, there is either more or less demanded or supplied. For example, when income increases we would expect the demand for most goods to increase at all prices. A movement along the curve shows the response of consumers and producers to changes in price alone. Movements along the curve will occur because there has been a shift in either the demand or supply curve causing a surplus or shortage in the market, as market forces cause price to either rise or fall, consumers...