Verified Document

Market Equilibration The Process Of Achieving A Essay

Related Topics:

Market Equilibration The process of achieving a market equilibrium relies on some basic principles. The principle of demand holds that, all other things being equal, the higher the price of a good the less people will demand of that good (Investopedia, 2012). There are exceptions to this law, for example goods with inverse price elasticity of demand, but in general the law of demand holds for all goods, even those with very low price elasticity of demand.

The law of supply is the inverse. It holds that all other things being equal the higher the price of a good, the more suppliers will want to provide. Thus, as prices rise, the supply of a good will rise because the profit associated with the production of that good will increase, but the lower the demand will be, because the buyers' marginal utility will decrease.

Those other things that must be equal, however, are the determinants of demand...

Among the determinants of demand are the price elasticity of demand, the availability of substitutes, the propensity of buyers to substitute and cross-price elasticity of demand. Buyer utility plays into the elasticity of demand, as does the nature of the good (whether the good is discretionary or mandatory). Supply is affected by opportunity cost as well, since producers often face production constraints. Those include capacity, the marginal cost of increased capacity, exit barriers, time, availability of key inputs and producer price control over new inputs.
Efficient markets theory holds that the price and supply of goods in a free market will trend towards an equilibrium point. It is unlikely that this point would ever be reached, because there is a time lag in the feedback, but the process works by way of a series of adjustments. Given that populations…

Sources used in this document:
Works Cited:

Investopedia. (2012). Economics basics. Investopedia. Retrieved April 11, 2012 from http://www.investopedia.com/university/economics/economics3.asp#axzz1rk5hnhyh

Riley, G. (2006). AS markets and market systems. Tutor2U.net. Retrieved April 11, 2012 from http://tutor2u.net/economics/revision-notes/as-markets-equilibrium-price.html
Cite this Document:
Copy Bibliography Citation

Related Documents

University of Phoenix Lawsuit University of Phoenix/Eeoc
Words: 1419 Length: 4 Document Type: Essay

University of Phoenix Lawsuit University of Phoenix/EEOC Lawsuit In 2006, the Equal Employment Opportunity Council (EEOC) sued the University of Phoenix, alleging that enrollment counselors who were non-Mormon were discriminated against. The federal lawsuit states that employees who were not Mormon (members of the Church of Jesus Christ of Latter-Day Saints) were not treated favorably when it came to reprimands, tuition waivers, and leads on new students (Gilbertson, 2006). There are 4400

University of Phoenix Overview Business
Words: 822 Length: 2 Document Type: Term Paper

Key success factors The following are the most critical success factors today for University of Phoenix: Consistently attracting qualified students by developing relationships with corporations who offer reimbursement. This Is critical for the long-term growth of the university, specifically working with larger corporations who offer attractive educational reimbursement programs to their students. Developing more global opportunities for growth by partnering with other universities in Europe and Asia. University of Phoenix needs to also partner

University of Phoenix Resource Tools
Words: 725 Length: 2 Document Type: Term Paper

3c. All effective problems solving requires a model or a structured means of discovering solutions. Arbitrary methods are ineffective because they allow for too much bias and chaos in the communications process. The nine-step model provides one of the most effective problem solving methods. These nine steps cover all the essentials of effective problem solving including simply describing the situation in clear terms. Framing the problem eliminates extraneous information. Stating

Future Technology: The University of Phoenix Workplace
Words: 2216 Length: 7 Document Type: Essay

Future Technology: The University of Phoenix Workplace & Classroom In 1976, Dr. John Sperling founded University of Phoenix (UOP) and made a commitment to provide working adults with local higher education options at convenient class times. Today, students study at more than 200 locations, as well as through online programs available in countries around the world. Not only will adult learners attend classes that are convenient for them, they will earn

College of Central Florida Sustainable Source of Competitive Advantage...
Words: 2149 Length: 7 Document Type: Essay

College of Central Florida has only one sustainable source of competitive advantage, which is government funding that allows it to be a cost leader, while still offering high quality programs. Other advantages are perhaps less sustainable, but the school has been able to carve out a niche in the competitive market for higher education in central Florida. Its location serves people in a specific geographical region, and its programs are

Values Conflict Universities Provide an Amazing Opportunity
Words: 832 Length: 3 Document Type: Essay

Values Conflict Universities provide an amazing opportunity for both growth and development in regards to academic development. Universities in particular provide a means of providing a stable and more robust income for individuals seeking a particular specialization. The University of Phoenix, in particular, has a unique method of teaching and providing a quality educational experience. Small class sizes, online specialization, and knowledgeable professors all make the university experience all the more

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now