Market Equilibrium Process Paper

Market Equilibrium Process Paper When establishing the social constraints and customs that make up the society as we know it, we much able to establish and explain the needs, wants, and overall longings that make up said society. According to the reading, in economics,

economic equilibrium refers to the current state of the world (or society) where certain economic forces are balanced and equally settled. In the absence of said balance, there are usually external influences that help stabilize the equilibrium values so that the variables will not change. Market Equilibrium refers to the condition where market prices are recognized through great competition, resulting in the amount of goods and/or services being sought out by potential buyers. This occurrence leads to the equal amounts of goods and/or services created and produced by sellers. Market equilibrium is thereby the point where a particular industry offers specific goods at specific prices, where targeted consumers will buy and consume said goods without generating a deficiency or an excess of goods. A perfect example of a market equilibrium commodity that is currently affecting society is the ever changing and rise of gas prices. Currently in the city of Chicago, gas prices average $4.67 per gallon. With the increase of the gas prices, one would assume that because of the huge jump in gas prices, the driving habits would change. As the gas prices are continuing to rise, drivers are slowly

beginning to change their driving habits in order save money. Rather than drive to and from work, many people are utilizing public transportation or even going old school and carpooling with coworkers in order to save money. Subsequently,

consumers are changing their habits as a result of the change in the economy.

Market Equilibrium Process Paper

Keeping this idea in mind, it is important to remember that the process of market equilibrium occurs primarily when price and demand in the market are equal to one another. When considering the gas prices in the city of Chicago, assuming the price of gas per gallon is below the equilibrium price, there will be a shortage in the quantity demanded by the economy, which could eventually surpass the quantity supplied.

Market Equilibrium Process Paper

References www.chicagogasprices.com. Retrieved June 8, 2011. McConnell, C.R., Brue, S.L., Flyn, S.M. Economics: Principles, Problems and Policies. (18th ed.). The McGraw-Hill Companies.