Market Equilibrium Process

Market Equilibrium Process


Market Equilibrium

This paper will discuss the market equilibrium process and it will clarify real world experiences related to the subject.   Supply and demand are the tools which assist us in understanding how the markets work.     Understanding these tools show how buyer decisions in regards to goods or services work along with suppliers to determine the equilibrium.   (McConnell, Brue& Flynn, 2009).
      We are in search of the equilibrium price and equilibrium quantity. The equilibrium price is the price where the goals of buyer and seller are the same. Basically, market equilibrium is a provision where the amounts of goods or services which are demanded by buyers are one and the same to the amount of goods or services supplied by sellers (McConnell, Brue& Flynn, 2009).
      However, when demand intentions change, such as product price, the household’s income, tastes or preference will shape the equilibrium of a markets. On the flip side of things, changes in the determinant of supplier such as changes in cost of production, technology and prices of other related goods and services cause the modification in equilibrium markets (McConnell, Brue& Flynn, 2009).
      For example when there is a slight raise in the price of fuel, the cost of owning a vehicle increases.   Paying higher prices for gasoline while owning an automobile is inevitable.   Many of today's consumers are trying to compensate for the higher prices in gas by purchasing fuel efficient vehicles such as the Toyota Prius.

      Let's determine how gasoline prices can also affect those consumers who own used cars.   We will assume that a used car owner decides to trade in the vehicle for a new fuel efficiency car.   In doing so, the used car market becomes sensitive to consumers regarding the price of gasoline.   If the used car owner and the future potential buyer has the same driving habits,   the increase of gasoline price and usage cost for both of them...
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