Market Equilibration Process

1 January 2017

Mike Blackmon Market Equilibration Process Paper No matter what we do throughout our lives we always want those factors that make our lives to always balance out. The same concept can be applied in the business world. Market equilibrium is the state in which market supply and demand balance each other, which makes the prices on products and services stable. (site) In order to understand market equilibrium, it is important to have a clear understanding of supply and demand.

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A supply is a schedule showing the amounts of a good or service that sellers will offer at various prices during some period. (site) An example of a supply can be a pair of Ralph Lauren boots or a Playstation 3. A demand is a schedule showing the amounts of a good or service that buyers wish to purchase at various prices during a period of time. (site) One example of a demand is the amount of people who want to buy those products during the Black Friday.

Consumer desires, consumer income, the amount of substituted goods that could be produced, and the advances in technology are all variables that can demand which way the market equilibrium shifts. This paper will express how market equilibrium is involved in the automotive industry and how the demands for those automobiles shift. A real life example that pertains to the concepts of the market equilibrium of supply and demand is in the automotive industry. This process normally takes place at the beginning and the end of the calendar year.

Ever since I have been working at JT’s Automotive Group there has always been a huge demand for a KIA. Since gas prices have increase the demand has been so high. The reason for this is because all the cars within the KIA brand are fuel efficient automobiles. Last month JT’s Automotive Group ran a huge sale which almost cut the prices on these automobiles almost in half. Consumers from all over the southeast and from the north brought vehicles from this dealership.

At this time the market equilibrium was balance because there was an equal about of supply to fulfill the high demand. By buyers and sellers agreeing to a certain equilibrium prices it made this automotive group stand out as one of the best dealerships on the east coast. Since the big sale ended on March 31, the demand for a KIA has decrease to the point where it has come to a stop. One main factor that brought about this change is that there has become a shortage on the supply available for the consumer to see and purchase on the spot.

Since there is not enough supply the dealership has offer to pre-order vehicles to help balance out the consumer demand but till this day there has not been successful in increase the revenue. As stated before market equilibrium is where there is an equal balance between supply and demand. This is normally a key factor that most managers must incorporate in order to be aware of their quarterly and annually projections. Until the quantity increases in supply with JT’s Automotive Group that will be able to respond to the high demand for KIA automobiles in the Columbia market there will always be an imbalance that needs to be fulfilled.

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