Market Equilibrating Process Paper Yadhira Santiago ECO 561/Economics Jack Karczewski April 18, 2010 Market Equilibrating Process Finding equilibrium in the market is the same as finding equilibrium in our daily lives. Before you can find equilibrium it is important to understand the demand and supply of a product. Natural disasters or man made disasters can lead to increase the necessity of a product. As of this moment Wendy’s restaurants are having some difficulties obtaining tomatoes.
Since the bad weather a couple months ago, the tomatoes crops were damaged and now the tomatoes supplies are running low and they can not produce enough to cover the actual demand for tomatoes. Due to this shortage on supply the price on tomatoes have being increasing. Because of this price increase Wendy’s fast food restaurants have decided to stop offering this produce on their burgers until further notice. Equilibrium price the common ground for a buyer and a seller.
Same scenario happened with strawberries, because of the bad weather the farmer’s crops were damaged and they will force to increase the price on strawberries. It was noticeable at your groceries store the increase on prices. Consumers choose not to pay the high prices meaning that the supply of strawberries will increase and go bad. Sometimes business choose to low the prices before the produce will go bad even if this means that won’t make a lot profit. If consumers were willing to pay the high prices for these produces the market will become competitive and the business will start making different trategies to allure consumers in their direction. This competition will start bringing the prices of the produces down, but it is important that business understand that they need to set up a line before bringing the price too low and hurting the market permanently. Because some businesses have been careless about this, other businesses have suffered and they have gone out of business. Conclusion Competition is good to drive some business to lower their prices and consumers will get better prices.
Market equilibrium is good for the economy but once that equilibrium goes either up or down, it affects the economy. We all remember the price of gas going sky rocket the economy was severely affected by it. People have to understand what market equilibrium is and start acting more pro-active towards maintaining a financial stability in their families. References: McConnell, Brue, Flynn (2009) – Demand, Supply and Market Equilibrium – Introduction to Economics and the Economy (Chapter 3)