Market_Equilibrating_Process

Market Equilibrating Process The market equilibrium is defined as a condition where a market price is established through competition in such a way that the amount of goods or services demanded by buyers is equal to the amount of goods or services supplied by sellers. This price is known as the equilibrium price or market clearing price in which the quantity demanded equals quantity supplied (McConnell, 2009). The equilibrium quantity on the other hand, is the quantity demanded and quantity supplied at the equilibrium price in a competitive market (McConnell, 2009). By combining equilibrium price and equilibrium quantity will yield the market equilibrium of a specific market. However, changes in the determinants of demand, such as the price of a product, the household’s income, the prices of related products, the household’s tastes and preferences can affect the equilibrium of a market (Pearson, 1995-2010). Additionally, changes in the determinants of supply will also affect a specific market. Supply factors such as changes in production costs, technology, and prices of related goods can cause a change in supply hence, causes the supply curve to shift resulting in either a decrease or increase in supply (Pearson, 1995-2010). The market equilibrating process can be explained through my personal experiences. First of all, I considered myself a savvy or better yet, a “bargain” shopper. Before I shop, I like to look at the ads to find out who can offer me a better deal on the items that I want; from my neighborhood grocery stores or retailers like Publix and Kroger to Target and Walmart, respectively. Although looking through one advertising ad may have the items at one price, whereas another may have them at better prices. Of course I would want to purchase those items at the lower prices at a particular store compared to its competitors. The difference in prices may be because the items have a surplus in supply, the demand have decreased, or simply the items will be expiring or is going out of season soon. Market equilibrium exists when quantity demanded equals quantity supplied. Regardless, any changes in the determinants or factors stated above for both demand and supply will affect the entire market equilibrating process. References McConnell, Campbell. (2009). Economics: Principles, Problems, Policies (18th ed.). : McGraw-Hill. Pearson Grou[, . (1995-2010). Welcome to the Companion Website for UOP-custom course for Economics. . Retrieved from http://wps.pearsoncustom.com/pcp_90734_uop_casefair/109/27997/7167233.cw/index.html.