Eco 561 Market Equilibration Process Paper
Market Equilibration Process
ECO/561
May 29, 2014
William Akamine
Market Equilibration Process
Market equilibration gives businesses the opportunity to mold to different changes that occur within the field of marketing. With market equilibration, market prices are established through product and service competition. For example, the amounts of goods or services required by customers are equivalent to the amount of goods or services produced by business. Market equilibration will allow the business and customer to be on the same sheet of music with product and prices.
Law of Demand
In order for market equilibrium to exist, the economy must have a need for a particular product or services. For there to be a demand, customers must be prepared to pay the established prices set by the industry. After the need for a particular product has been identified, manufacturers can begin producing the products. …show more content…
When a consumer is prepared to pay the price the market is asking market equilibrium is established. Should there be an imbalance of the demand or supply, there would be no equilibrium. In cases of supply imbalance, this could cause prices to increase which would inadvertently create business and revenue for the competition. Contrary to supply shortage is an excess of supplies. Excess supplies in the market will cause the market prices to drop resulting in an imbalance in the market equilibrium.
Efficient Market Theory
Efficient market theory is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices always to incorporate and reflect all relevant information (Investopedia, 2014). Because stock usually trades at fair values the efficient market theory keeps the stock exchange fair and honest. It prevents investors from selling at over inflated prices or purchasing at underrated prices.
Surplus and
ECO/561
May 29, 2014
William Akamine
Market Equilibration Process
Market equilibration gives businesses the opportunity to mold to different changes that occur within the field of marketing. With market equilibration, market prices are established through product and service competition. For example, the amounts of goods or services required by customers are equivalent to the amount of goods or services produced by business. Market equilibration will allow the business and customer to be on the same sheet of music with product and prices.
Law of Demand
In order for market equilibrium to exist, the economy must have a need for a particular product or services. For there to be a demand, customers must be prepared to pay the established prices set by the industry. After the need for a particular product has been identified, manufacturers can begin producing the products. …show more content…
When a consumer is prepared to pay the price the market is asking market equilibrium is established. Should there be an imbalance of the demand or supply, there would be no equilibrium. In cases of supply imbalance, this could cause prices to increase which would inadvertently create business and revenue for the competition. Contrary to supply shortage is an excess of supplies. Excess supplies in the market will cause the market prices to drop resulting in an imbalance in the market equilibrium.
Efficient Market Theory
Efficient market theory is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices always to incorporate and reflect all relevant information (Investopedia, 2014). Because stock usually trades at fair values the efficient market theory keeps the stock exchange fair and honest. It prevents investors from selling at over inflated prices or purchasing at underrated prices.
Surplus and