Market Equilibrating Process

Market Equilibrating Process
Economics is used to study “how individuals, institutions, and society make optimal choices under conditions of scarcity.”   (McConnell, Brue, & Flynn, 2009) Part of economics is the market equilibrating process. Market equilibrium is the point in which industry offers goods at the price consumers will consume without creating a shortage or a surplus of goods. Shortages drive up the cost of goods while surpluses drive the cost of goods down, finding the balance in the process is market equilibrium. It is important to understand there are different factors which affects the supply and demand which would lead to a change in the market equilibrium. The increase in Hyundai sales in 2010 is a great example of how a change in demand can create a change in supply which in turn would change the market equilibrium.
All throughout 2010, Hyundai made headlines in the auto industry such as: ‘Hyundai defies downturn to post record profits,’ ‘Hyundai Sales End Year Up A Staggering 24% - December Sales Soar 33%,’ and Hyundai bucks the trend with a sales increase.’ What brought about this change and what made Hyundai different from the other automakers? One of the reasons for the change could be explained by the price of related goods, which states “a change in the price of a related good may either increase or decrease the demand for a product.” (McConnell, Brue, & Flynn, 2009)   Hyundai has always been less expensive then it competitors as it has been around for the last six decades but have not seen increase of these magnitude.   “The South Korean group was one of few carmakers to have a good 2009 as the global economic crisis increased demand for smaller, fuel-efficient vehicles, while its rivals such as General Motors and Toyota Motor suffered losses amid the industry’s worst downturn in decades.” (Jung-A, Jan )
Part of the reason for the increase in sales the theory “because we can’t have it all, we must decide what we will have and what we...