Market_Equilibrating_Process

Market Equilibrating Process Francis Owolabi University of Phoenix Economics 561 Joe Krupka August 18, 2010 Market Equilibrating Process Market equilibrating process can be considered the balancing act and the reality of life. It is that process where what is wanted or desired is met with the supply of it. That is the point at which the decision making produces a desire for goods and services and the supply satisfies it equally. In order to understand the process it is necessary to discuss market equilibrium and the factors that contribute to it Market Equilibrium Market equilibrium refers to the situation where price is established and suppliers of goods and services are willing to satisfy the equal amount demanded. The market at that point dictates the price, which is known as equilibrium price. This is perhaps the most stable point in the market with everything being equal. Everything is not always equal in the market and that is why some forces tend to influence the equilibrium position. If the supply forces and demand forces are interrupted by outside forces the dynamic of pricing, supply and demand change. The recent oil spill disaster in coastal region of the gulf is an example of the outside force that influences the process of equilibrium. The gulf region economy hinges on fish and shrimp industry. The oil spill has since put a hold on fishing activities in the last three months. The result is shortage of sea food and spike in price at least in that region. The shortage has created artificial price increase in sea food industry as demand surplus is created. Until the fishing activity is resumed the equilibrium point will be replaced with a new one as the forces of demand and supply adjust to the new situation. When good become scarce, that is usually the prelude to price increase. Conclusion Market equilibrating process means there are factors that influence the supply and demand of goods and services. The factors combined with the forces of supply and demand create balance. The point of balance when the desired goods and services are met with equal supply is called equilibrium point. When outside force interferes with these forces a new position and price are created. The equilibrium point and pricing is usually a market created situation. References David, C. C. (2004). Economics (University of Phoenix e-text ed.). Retrieved from https;//ecampust.phoenix.edu/secure/resources.asp McConell, C., Bruce, S., & Flynn, S. (2009). Economics Principles, Problems and Policies (18 ed.). Retrieved from University of Phoenix Custom Edition e-text