Market Equilibrating Process Paper free essay sample

Market Equilibrating Process Paper Market equilibrium is the point in which industry offers goods at the price consumers will consume without creating a shortage or a surplus of goods. Shortages drive up the cost of goods while surpluses drive the cost of goods down, finding the balance in the process is market equilibrium. A good example of a market equilibrium commodity would be the price of gasoline. Currently a barrel of oil is around $81. 00USD. This has resulted in an increase in the price of a gallon by about $1. 0 from one year ago to an average of about $3. 00 per gallon of gasoline. While driving habits have not started to change, people are taking notice and may be looking to make changes should priced continue to rise. The sector of the market that is taking notice and making a changes is those homes that use oil for heating. The recent cold snap in the mid-west and east has increased the need and usage of oil. We will write a custom essay sample on Market Equilibrating Process Paper or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The $1. 00 increase in price per gallon of gas from a year ago is resulting in a larger percentage of increase in home heating. Consumers are starting to make changes in their live style in order to achieve a personal equilibrium in their budget. The dollar increase may not seem like much but the bottom line result is in increase of about 3% 5% in homes heating costs. The reasons sighted for the increase in oil is increased consumption by China, colder than normal temperature is Europe and shortages in Europe due to their unseasonable amount of snow fall in the large cities. Market Equilibrating Process Paper free essay sample Running head: MARKET EQUILIBRATING PROCESS paper Market Equilibrating Process Paper Sonia Reyna University of Phoenix Daniel Rowe ECO/561 June 1, 2010 Abstract Today’s society must study social mechanisms, political realities, and social customs to coordinate its wants, needs, and desires. Mexico has one of the most unstable economies. The government in Mexico announced the price increase of corn tortillas. The price of the product went up 14% last year. In supply demand, prices are affected by the demand of the resources and the ability to meet the demand. If there is a high demand for resources and the demand is not met, prices can reach records high. This paper will talk about the supply and demand and how it has affected prices increase for corn products. Market Equilibrating Process Paper Today’s society coordinates its wants, needs, and desires in many ways and to do this it must study social mechanisms, political realities, and social customs. We will write a custom essay sample on Market Equilibrating Process Paper or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Economics is the social science that examines how individuals, institutions, and society make optimal choices under conditions of scarcity, (McConnell, Brue, Flynn, 2009). Market Equilibrating Process Related to Corn Shortage Scarcity is when the goods available are too few to satisfy the desires of individuals (Colander, 2004). Simultaneous changes in supply and demand affect equilibrium price and quantity in various ways, depending on the relative magnitudes of the changes in supply and demand, (Colander, 2004). A decrease in the supply of a product increases its equilibrium price and reduces its equilibrium quantity. In contrast, an increase in the demand for a product boosts its equilibrium price and its equilibrium quantity, (McConnell, Brue, Flynn, 2009). This affects economies around the globe. Mexico has one of the most unstable economies. During the first week of April, the government in Mexico announced the price increase of corn tortillas. The price of the product had already gone up 14% last year. The increase outpaced inflation and minimum wage increases to its citizens by four percent (Gilot, 2007). Retailers in Mexico will be forced to keep prices at eight and a half pesos per kilo, which is about . 78 cents. Supply, Demand, and Price As the demand of corn supply has increased, this caused the price of the resource to go up. In supply demand, prices will always be affected by the demand of the resources and the ability to meet the demand. If there is a high demand for resources and the demand is not met, prices can reach records high, (Colander, 2004). In the case of the corn tortillas, the departments in charge of increasing prices know the tortilla is an item mostly always consumed by all Mexicans. They know that even though the price increases, citizens will be forced to buy corn products. Conclusion Today’s society must study social mechanisms, political realities, and social customs to coordinate its wants, needs, and desires. Mexico has one of the most unstable economies. During the first week of April, the government in Mexico announced the price increase of corn tortillas. This year’s increase came to surpass inflation and minimum wage increase. In supply demand, prices are affected by the demand of the resources and the ability to meet the demand. If there is a high demand for resources and the demand is not met, prices can reach records high. References Colander, David C. (2004). Economics. 5E. The McGraw-Hill Companies, Inc. [University of phoenix Custom Edition e-text]. Retrieved May 27, 2010, from University of Phoenix, Student Resources Web site: https://ecampus. phoenix. edu/secure/resource/resource. asp. Gilot, L. (2010, April). El Paso Times, pp. 1. McConnell, Campell, Brue, Stanley, and Flynn, Sean. (2009). Economics. Principles, Problems, and Policies, 18 E. The McGraw-Hill Companies, Inc. [University of phoenix Custom Edition e-text]. Retrieved May 27, 2010, from University of Phoenix, Student Resources Web site: