Marketing_Equilibrating_Process

Market Equilibrating Process Paper The balance between supply and demand is how the market can be viewed as being equilibrated. According to McConnel, & Brue, “markets bring together buyers (“demanders”) and sellers (“suppliers”), and they exist in many forms”. The housing market process is a great example of understanding this process. In the situation of buying a home the buyers and sellers must reach an equilibrium price that matches their expectations. For example from pervious experience of purchasing a home the buyers expectations was close the deal on the house under a fair market price based on the comparison of home prices in that area at the time. The sellers’ intention was to do the same with no lost on the property. The price of the home was set based on the supply of homes in the area and the demand for home at that time. The sellers goal was to get at least three hundred and seventy thousand dollars for the home and the buyers’ goal was not to go over three hundred and seventy thousand dollars for the home. So in this case the buyers and sellers were at a point where the process was equilibrated because they had reached a number of neither surplus nor shortage. The reality of the housing market is that equilibrating rarely happens and if it happens it seldom remains. According to united, “the market adjustment process is subject to time delays due to the length of time it takes to finance, design, and construct new supply, and also due to the relatively slow rate of change of demand. Because of these lags there is a great potential for disequilibrium in the short run. Adjustment mechanisms tend to be slow, relative to more fluid markets” (2008). With the housing market being highly elastic a mismatch between supply and demand will continue to affect the outcome of pricing and quantity. Reference: McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin. Retrieved from UOP United. (2008). Equity based services. Retrieved March 15, 2010 from http://unitedbuilthomes.vox.com/