Market_Equilibrating

Market Equilibrating Process Paper Kimberly Renee Head Unversity of Phoenix ECO561 Economics Kimberly Renee Head Unversity of Phoenix ECO561 Economics Abstract Within this paper I will discuss the market equilibrating process. In this fast changing society it is important to understand the social standards in order to coordinate what sellers want to seller with what buyers will buy. Equilibrium is state in where supply and demand equals one another. Most manufactures such as Wella try to maintain a balance between the two. This paper will also discuss how economic standards can influence spending habits. Market Equilibrating Process The equilibrating process has been developed to explain the actions of supply, demand and pricing. When the demand for a particular good equals the supply of good, the market for such good is known as equilibrium. Correlated in any market equilibrium would be equilibrium quantity and equilibrium price. The equilibrium quantity is in which the quantity of good demanded match’s quantity supplied. As for equilibrium price it entails the price for quantity demanded equals quantity supplied. Demand and supply curves allow accountants, business owners, manufactures and many others to determine quantity and price also known as equilibrium analysis. A major hair coloring manufacture Wella must implement each factor previously discussed to remain successful. Wella is a professional hair coloring product. Within the last year prices have increased by 12%. A change in price will affect demand and the ability to meet such demands. Wella is a product that is normally that is found in an upscale salon. Clients of these salons are professional with well paying job who can afford the pay for this product. This factor plays a major role when defining what type of good Wella could be classified as. In an ordinary salon such product would be viewed as an inferior good because the demands of this good will vary with income. On the other hand in an upscale salon this product would be classified as a normal good because most client spending habits will be different their income may increase but the demand will remain the same. In the case of an upscale salon and the change in price sellers assume that income will remain the same also known as the constant. There will be change in quantity supplied with the change in price. Such changes in supply and demand will affect equilibrium price and quantity in a number of different ways. If the demand for a good increases the equilibrium price as well as equilibrium quantity will increase as well. Certain factors that could cause a boost such as this could be holidays and a number of others factors. The equilibrating process is dependent on a number of different factors such as location, stability of economics, as well as product competitors. There are a number of substitute products on the market which can push Wella to lower their prices in order to stay just as competitive. Over the past 125 years Wella has evolved and flourished working side by side with top award winning salons giving them an edge over competitors. Reference 1. Camplbell R. McConnell, Stanley L. Bruce, Sean M. Flynn Economics: Principles, Problems, Polices, 18e 2. http://www.wellausa.com/consumer/about_wella/the_wella_brand/index.php' 2009 September 10, 2010