Market_Equilibrating_Process_Paper

Market Equilibrating Process Paper University of Phoenix ECO561/Economics J. Carl E. Bowman April 28, 2010 Market Equilibrating Process Paper Every retailer must deal with the price elasticity of demand in one way or another in order to stay in business. Some retailers have applied purchasing and distribution skills to lower prices for several generic drugs because of the great demand. The decision to lower generic drugs prices has made the competition tougher in its market. Retailers also gauge the elasticity of demand by changing the price to satisfy customers. Everyone deal with applying supply and demand concepts either at work or personal environment. In this paper, I will relate the concepts of this weeks’ reading to one of my real world experience. My experience deals with managing an apartment complex for two years. The supply and demands of the two bedrooms were confronted with different situations that affected it from a supply and demand curve. The economic decision that I had to make was based on the best interest of the community and the goals that Mid-America had to accomplish for economic growth. The supply, demand and equilibrium impacted the status of the two bedroom apartment in the city of Memphis. The demand and supply curve changed the status of the company when I had to decrease the price of the rentals making the demand for the rentals increase. As the rental rate was lowered, revenue increased and more potential clients were able to rent the apartments. In order to lease all the apartments, the rental rate needed to be raised because of the extra cost for maintenance. The demand for the apartments was important because I had to be careful not rent out apartments that were not available to occupy. Depending on the shortage of the market, it exerted an upward pressure on price of the rentals. The quantity supplied could have been more than the quantity demanded. The company moved into some now areas by trying to supply apartments for other areas in city causing the demand to increase by population and demand curve shifts to the right as well as some detach apartments. Understanding the fundamental of economics and how a market functions was the key success of renting the apartments. The advantages and limitations of supply and demand become identifiable if a company is unable to cover variable cost. Many companies allow prices to fall below average of the variable cost of goods then the company is forced to shut down. To minimize losses, a company should produce output to where price equals marginal revenue and marginal cost. Reference: Economic MSA (2007). Can Economics Learn From Marketing's Market Structure Analysis' Retrieved April 28, 2010 from; http://www.westga.edu/~bquest/1997/ecnmkt.html