Market equilibrium occurs every day in the market world, it's when the the
quantity demanded is equal to the quantity supplied. An example would be my
local Wal-Mart, our community often shops here to get daily necessities and
supplies. Wal-Mart does their part by providing the supplies and goods needed for
it's customers and we as the customers buy the goods from Wal-Mart. The
quantity supplied always meets our demand so it flows well in business. I think
the market was out of equilibrium during the time when the pandemic was at it's
worse, I remember in my town, our local stores were out of toilet tissue, cleaning
supplies and some food products. During this time I had to teach my children on
how to not waste toilet tissue and food by explaining to them that the supply of
these was low and it was possible that we could run out. The market slowly
built back up with supplies and necessities for the community that it serves.
Thankfully the market seems to be getting better. Market Equilibrium, as explained
by the text, is when the supply and demand for a product or service is equal.
This happens when the price of the product is equal to the amount that the buyer
is willing to pay. On a graph, this is shown by where the supply curve and
demand curve intersect.
At one point i can remember that the market was not in equilibrium, or when
supply for something didn't equal demand or vice versa, is right now with the
issues in petroleum and diesel. there is a large difference between the supply of
gas, which is low, and the demand for gas, which is always high. Therefore, the
price of gas has increased, throwing the market off of equilibrium and causing a
lot of headaches.
What needs to be done, is the supply needs to increase to meet the demand of
gas. To do this, American oil and gas companies need to be allowed to drill for
more oil. The US Government currently doesn't want this to happen, and what oil
companies need besides permits, is a good faith that their investments into drilling
for more oil won't just be reversed again in 2 years. In a market, consumer want
to buy products at the lowest possible price while producers want to sell their
products for the highest possible price. This is why the market price for an item
tends to lie in the middle of what the buyers and sellers want. In order to
prevent any surpluses or shortages, the demand and supply for a product should
be the same. This is what is known as market equilibrium. On a graph, this can
be shown by where the demand curve and supply curve intersect.The Covid-19
pandemic caused many markets to not be in equilibrium. One specific example
was the meat shortage that took place during the pandemic. Factory workers were
getting sick with Covid and were having to quarantine. This caused production to
slow down and less product to be produced, resulting in a shortage of different
meats. The meat products that did end up making it onto shelves, quickly sold
out from customers who were worried about when and if there would be more
available. Due to this, limits on how much meat you could purchase were placed
and prices went up. The market equilibrium occurs when the supply and demand
are equal. The supply and demand are equal when the buyers and sellers meet
somewhere in the middle on a certain price point. The way we can show
equilibrium graphically is when the supply and demand curve intersect on a graph.
An example from my own experience when the market was not in equilibrium for
a product or service was when the COVID pandemic first started, and people
were hoarding toilet paper. The demand for toilet paper was crazy high, but the
supply was low. The suppliers could not keep up with the demand. The buyers
were hoarding the toilet paper by buying more than they really needed at that
time. I personally ran into the problem with almost running out of toilet paper
due to the hoarding people were doing. They helped bring the market back to
equilibrium by putting a limit on how many packages you could buy at a time
and the pandemic kind of became more controlled in a way. Of course people
deciding that they did not need to hoard the toilet paper really helped. The
market equilibrium occurs when the supply and demand curves is combined and
they both can come up with a price that they can agree on. The price has to be
beneficial to both the seller and the buyer. To show equilibrium graphically it
would be the point where the supply curve and demand curve intersect. An
example of the market not being in equilibrium is when Yeezy shoes are released.
It is so hard to get your hands on a pair of Yeezy's whether it is the slides or
the foam runners. The demand for the shoes are much higher than the supply.
The market was out of equilibrium because not enough of the product is being
released. Due to this, third party sellers raise the price so high making all the
third party sellers have competitive prices. To bring the market back to
equilibrium more of the product needs to be produced and released on release
dates. The times we live in it is not just hard to get Yeezy's it is also hard to
get jordans as well. The market equilibrium occurs when both buyers and sellers
find a middle ground where they can both agree on prices. This stands true
basically in any industry from purchasing a new home to grocery shopping. What
balances the equilibrium is having enough supplies to meet the demand. One
example that comes to the top of my mind is when the pandemic first started.
The demand was extremely high for cleaning supplies, disinfectant, face masks and
even food! The problem was that suppliers couldn't meet the demand and the sad
part was how high the prices increased for people to even get their hands on
products that they needed. Due to such shortage, the market, tragically, became
more competitive with pricing though the supply was still lower than the demand.
Another example that somewhat reminds me of the nonsense we've endured during
the pandemic is how Jordans run the same game. Though the price of Jordans is
already high, the demand for certain pairs is always above supply. For this
reason, many people purchase the shoes before others just to resell them on the
internet for a higher price to supply the demand. A market equilibrium occurs
when buyers and sellers meet in the middle and agree to a pricepoint that is
sufficient for both sides. Given that supplies go down when prices go down, but
demand increases at the same time, where the slopes meet is the equilibrium. The
upward slop of supply and the downward slop of demand on a graph, when met,
is also called the market clearing price, where producers bring enough goods to
satisfy the amount that is demanded by the market. An example I have of a
market being out of balance is the current ratio of Playstation 5 demands vesus
the current supply. Shortages in components needed for production caused a
shortage in the supply chain, but the demand remained the same. When this
happened, third parties pulled in as many systems as they could to resell at a
higher prices causing even more of a shortage to occur. The pricepoint remains
the same because going any higher would cause consumers to move on the Sony's
competition, so with prices staying on that mark this has keep the demand at the
same place, but also caused the shortage to remain in place as well.
Unfortunately, at this time the market for this product is still out of balance
leaving consumers with a high demand, but no products for them to acquire. This
could be changed by higher prices, but again that would cause a potential lose in
the customer base. when a market is producing efficiently, government intervention
in the form of price ceilings, price floors, or price support in the designated
market is likely to create a deadweight loss. However, a price ceiling set above
the equilibrium price has no effect on the market to which it is applied.
Likewise, a price floor set below the equilibrium would not have an impact.
Given that the minimum wage is a price floor and considering the impact of
COVID-19, are you in favor of Congress increasing the minimum wage? Explain
your reasoning. Since people will rationally acquire information from the cheapest
sources first before turning to more expensive sources, the marginal cost of
acquiring information will tend to rise as more information is collected. The
optimal point is where the marginal benefit of the search equals the marginal cost
of the search. Discuss the implications to the economy of the free-rider
problem.allocative efficiency means that we are producing the goods and services
society values most highly. It does not mean that consumers can afford all of the
goods and services that they desire. The allocatively efficient quantity of the goods
and services is the level of production such that the marginal benefit of a pound
of the goods and services equals the marginal cost of that goods and services.
When less than the efficient amount of a good is produced, how does the
marginal benefit of the last unit produced compare to its marginal cost?
