Market Equilibrium

In: Business and Management

Submitted By WESLEYF
Words 445
Pages 2
Market Equilibration Paper
Thomas Fowler
June 2, 2014
Bobbie Murray

Market Equilibration Paper Economic concepts are inaugural part of business management. This will help an individual to operate a business successfully and maximize profits while reducing costs. One of the economic concepts is market equilibrium. According to (McConnell, Brue, & Flynn, 2009), “The equilibrium price and quantity are established at the intersection of the supply and demand curves. The interaction of market demand and market supply adjusts the price to the point at which the quantities demanded and supplied are equal. This is the equilibrium price. The corresponding quantity is the equilibrium quantity. A change in either demand or supply changes the equilibrium price and quantity. Increases in demand raise both equilibrium price and equilibrium quantity; decreases in demand lower both equilibrium price and equilibrium quantity. Increases in supply lower equilibrium price and raise equilibrium quantity; decreases in supply raise equilibrium price and lower equilibrium quantity” (p.1). In the appendix #1, the apple market shows what consumers and farmers would purchase apples at $2.00 per bushel. The equilibrium price for the apples is $2.00 per bushel. If the market price is below the equilibrium price, consumers want to buy more than the equilibrium price and producers will produce less. Excess demand is created and causes a product shortage. This allows consumers to contend with other consumers for the best deals in the store. The market price’s pressure between consumers will cease when the market price is back to the equilibrium price. The price below the equilibrium price is $1.00. This shows a shortage of 40,000 bushels (60,000-20,000). The shortage amount is the difference between demand and supply at that price. In appendix #2, it…...

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