Market Equilibration Process
- Submitted by: lilly01
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- Date Submitted: 04/14/2013 02:57 PM
- Pages: 3
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Introduction
Entrepreneurs and big corporations react differently than consumers do when it comes to the price changes of items in demand. Higher prices normally reduces the demand for the product therefore encouraging supply. While lower prices will increase the demand by discourage the supply. This paper will discuss market equilibration which combines supply and demand which makes up the free market theory.
Supply and Demand in Business
Supply and Demand is what puts business in business, without it there would not be any stores or gas stations. As consumers we normally bargain shop and try to find the right deals at the right price. As a manager we try to look at how we can make a profit for the company without putting the company in a financial bind.
The relationship between supply and demand in business is how they affect prices. My company is a food and vending company and we have contract with stadiums for their food service needs. With the NBA, NFL, NHL strikes occurring in the past the company has lost a huge profit because with the lockout consumer could not go to the games therefore tickets sells were not existent so the stadium lost profits as well as the food service companies within the stadiums. The graph below show how the supply was high but the demand was low with prices staying the same since no one could buy tickets. The point where supply and demand intersect in the graph is when equilibrium occurs. This graph represents excess supply.
Price s
d
Excess Supply is when the prices are set too high and excess supply not being utilized. I think if the lockout did not happen equilibrium would have occurred right before peck playing times. For example, opening day for a baseball game there is a demand for tickets and there is plenty of supply. As the season progresses the demand for tickets my lessen and in between that time equilibrium can occur.
Market Theory
With this opinion comes the market theory or free market...
Entrepreneurs and big corporations react differently than consumers do when it comes to the price changes of items in demand. Higher prices normally reduces the demand for the product therefore encouraging supply. While lower prices will increase the demand by discourage the supply. This paper will discuss market equilibration which combines supply and demand which makes up the free market theory.
Supply and Demand in Business
Supply and Demand is what puts business in business, without it there would not be any stores or gas stations. As consumers we normally bargain shop and try to find the right deals at the right price. As a manager we try to look at how we can make a profit for the company without putting the company in a financial bind.
The relationship between supply and demand in business is how they affect prices. My company is a food and vending company and we have contract with stadiums for their food service needs. With the NBA, NFL, NHL strikes occurring in the past the company has lost a huge profit because with the lockout consumer could not go to the games therefore tickets sells were not existent so the stadium lost profits as well as the food service companies within the stadiums. The graph below show how the supply was high but the demand was low with prices staying the same since no one could buy tickets. The point where supply and demand intersect in the graph is when equilibrium occurs. This graph represents excess supply.
Price s
d
Excess Supply is when the prices are set too high and excess supply not being utilized. I think if the lockout did not happen equilibrium would have occurred right before peck playing times. For example, opening day for a baseball game there is a demand for tickets and there is plenty of supply. As the season progresses the demand for tickets my lessen and in between that time equilibrium can occur.
Market Theory
With this opinion comes the market theory or free market...