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Market Equilibrating Process

In: Business and Management

Submitted By cholwanit
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Market Equilibrating Process
Student Name
ECO/561
Date
Peter Oburu

Market Equilibrating Process Market equilibrium is defined as a state where the quantity supplied matches the quantity demanded (McConnell, Brue, & Flynn, 2009). In case where there is lack of equilibrium a business can be have a surplus or the buyers could face a shortage. The process in which the market adjust to the demands of market buyers and supply of market sellers is know n as the market equilibrating process. If the market price of a good or service is set above market equilibrium price, the demand will be less than the supply and the net effect will be a surplus. On the other hand, the market price of a good or service is set below the market equilibrium price, the demand will be greater than the quantity supplied and the net effect will be a shortage. For a business either of these scenarios can be detrimental, therefore it is very important that a business owner set their price at the market equilibrium, which is the ideal price for both business (suppliers) and the consumers. This paper provides an example of how the market equilibrating process works for a martini lounge. The paper proceeds as follows; first we describe ... then we highlight ... and finally we conclude that ... As the owner of a restaurant, I have to pay very close attention to pricing in an effort to ensure a steady flow of customers and to build profitability. The type of restaurant I own can be classified and ‘Mid-tier’ and is seen as a as a luxury as opposed to a necessity coupled, in addition because of the ubiquitous availability of similar restaurants i.e., substitutes the items I offer in the restaurant can be classified as elastic. If there is any type of price increase on a meal, customers will visit a cheaper competitor. With the downturn in the current economy many consumers are facing…...

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