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Market Equilibrating Process Amanda Sigmund University of Phoenix ECO 561 May 4th, 2013 Introduction The market equibilbrium is basically, a case where both the supply of a specific item or service is exactly equal to its demand. (Investopedia) With market equilibrium the price of services and items stays constant because there is never a shortage nor surplus in this market. Examined below is an example of JMS Recycling's market of copper scrap metal. JMS Recycling is the company I currently work for. Real World Experience In the scrap metal recycling industry, scrap copper has a very large marekt. From mills who create new pipes to other mills manufacturing copper sheeting, it is evident there is a great need for this precious metal. Currently, JMS Recycling ships copper out of its facility on an every other week basis. Since the amount of weight brought in of scrap copper for a two week period, is approximatly 10,000 - 15,000 pounds, different types ofmetals are shipped at the same time to cut down on fuel expenses. The mills that JMS Recycling takes its copper metals to also has a minimim requirement of 7,000 pounds. Anything less than 7,000 pounds per load is unaccepted. In an equilibrium, JMS Recycling would ship its copper metals only once a month. The company would have 20,000 per month to sell to the mill. Anything less would put JMS Recycling at risk for a smaller price paid from the mill since they base their prices off the more material you are able to sell. Any pounds in excess of 20,000 per month would be more than the mills maximim tonnage where the price levels out. At more than 20,000 pounds per month, JMS Recycling would also have to ship more than one load a month since their truck would be overweight. Customer Impact The customer impact on this supply and demand situation is quite interesting and very important. If JMS Recycling is needing an equilibrium of 20,000 pounds of copper per month they would have to adjust their prices to cusotmers accordingly. If the business was far away from reaching their goal they would demand more from their customer and therefore would pay a higher price to entice customers to sell their copper metals. However, if JMS Recycling were almost over their goal they would have less of a demand for the material and would offer less money to customers for such materials, making the customer less interested in selling their material at that time. Mill Impact Supply and demand also has a significant effect on the mill that JMS Recycling is selling its materials to, just as supply and demand greatly affected its customers. If JMS Recycling was not at its equilibrium and was not able to meet its goal of the 20,000 that the mill required for the best price, then ultimately the mill would be in demand of more material. While in demand of more material they would be willing to pay a significant amount more. Oppositely, if JMS Recycling was to sell over their 20,000 goal, the mill would have an over abundance amount of material, which would therefore require them to decrease the amount they pay to its customers for these materials. Conclusion Overall, the price of any material in the scrap metal industry is based off of supply and demand. The more surplus of a material the mill has, the less they will want to pay for more and in the event of a shortage of a certain material, the more they will be willing to pay, respecitively. References Cliffs Notes (2012). Retrieved May 4th, 2013 from http://www.cliffsnotes.com/study_guide/Accounting-Principles-II.topicArticleId-21248.html Investopedia (2012) Supply and Demand. Retreived May 4th, 2013 from http://www.investopedia.com/terms/e/elastic.asp McConnell, C. R., Brue, S. L., Flynn, S. (2009). Economics. Principles, Policies (18th Ed) Retrieved May 3rd, 2013from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx'assetMetaId=c35a3b95-8157-4874-a599-92eeee3896a3&assetDataId=d0377397-a44f-4d5f-a12f-b4b3922f7845&assetpdfdataid=e0c8d876-9462-4283-adb2-4c66ab2a87c3 University of Phoenix Material Price Do So Appendix A