Market Equilibrating Process

Market Equilibrating Process Paper

Market equilibrium refers to the selling price “where the intentions of buyers and sellers match”.   This means that the quantity sellers are willing to sell at a particular price matches the quantity buyers are willing to purchase at that same price, or, in other words, where the quantity demanded equals the quantity supplied.   A surplus results when the price is too high (quantity supplied is more than consumers are willing to buy) and a shortage occurs when the price is too low (quantity demanded is more than quantity supplied).   The equilibrium price changes when there is a shift in either supply or demand.
The market is made up of two basic groups, households and businesses.   These two units buy and sell goods and services from and to each other.   The market system uses competition among buyers and sellers to regulate the price of available goods and services.   Theoretically, this insures that no one buyer or seller will be able to monopolize the market because others can come in and undercut the price.
Supply and demand are affected by changes in consumer preferences, number of buyers in the market, consumers’ incomes, the prices of related goods, and consumer expectations.   The economy is currently in a recession, or depression depending on whom you ask, that has greatly affected these determinants of demand.   Many industries and individual consumers have seen a steep decline in income due to this market low period.
The recession has had a significant affect on the construction industry in which this author currently works. There is currently a surplus of commercial and residential properties on the market.   This surplus discourages businesses from starting new construction projects.   This has led to businesses reducing their workforces which has in turn led to consumers reducing their spending and has become a circle of lower buying and selling.  
The construction industry was not the only one affected by this cycle....