Market Equilibrium Process

Market Equilibration Process
Maceo R. Lynch
ECO/561
May 27, 2014
Jeremy Alessandro

Market Equilibration Process
The market equilibration process involves movement between two equilibrium points as a result of some change in supply or demand in a given market. Managers must understand this process, economic principles, and supply and demand to identify and follow changes when making important business decisions. The coffee industry is represented by in the free market globally by 70 countries. The supply and demand for coffee is affected by many different variables, such as droughts, rains, government sanctions, and political crisis's. Coffee has and will continue to be affected by changes in market equilibrium, specifically supply and demand, which change based on the behaviors of consumers and suppliers. Let's look at defining certain elements of the market equilibrium process.
There is the law of demand and the determinants of demand which is a microeconomic law that state as the price of a good or service increases, the consumer demand for the good or service will decrease, and vice versa (Law of Demand, 2014). This is applicable only if all other factors are equal. This also means that the higher the price, the lower the demand quantity; as the consumer opportunity cost to purchase a good or service increases, they must be willing to take additional tradeoffs to acquire a more expensive or higher quality product. There is no demand of a good or service without supply of the same good or service. According to Investopedia (2014), the law of supply and demand defines the effect that the availability of a particular product and the desire (demand) for that product has on the price. This definition is the opposite of the law of demand. Under normal situations, if there is a low supply and high demand of a good or service, the price will be high. However, if the supply is greater than the demand, the price for the good or service is lower.
The efficient...
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