Market Equilibrating Process

Market Equilibrating Process

Celita Hubbard

ECO/561

December 2, 2012

Fred Bell

The market equilibrating process is the technique producers use to maintain a balance between supply and demand reaching equilibrium. The methods prepare techniques, patterns and strategies that will lead to a maximization of profits. This process is also referred to as a circumstance where the supply of a product is equivalent to its demand. The price then remains steady in this situation as there is no surplus or shortage reflected in the market.

An example would be the last time I bought fresh produce I was surprised at the price. I decided to do a little research into why produce is so expensive. It was brought to my attention I had bought the produce in the off-season. Produce has elevated prices in the off-season because of imported produce into the U. S. from foreign companies that has opposite growing seasons.

Another reason for the increase is the cost of producing fresh produce. The cost has risen at approximately 4% annually since the beginning of the 2000s. Reasons for the elevated costs of growing produce is linked to new regulations for land use, importing costs and regulations, weather, irrigation, and technology. Along with the above reasons, market information for supply and demand will also help determine quantities and price.

Market information will tell what the consumers buying trends are, if they are buying a substitute product at a reduced price or if the consumer is buying the product at the current price. Wholesalers will know what the demand for consumers and producers are. Market information informs growers of the type of crops the consumer demands, the quantity, and the season. By studying the market information the growers can plan the types of crops they plant and when they plant. The market information will also inform the growers of predictable and unpredictable changes.

Demand for produce is inelastic so informed growers know current...