Friday, August 9, 2019

Market equilibrium Research Paper Example | Topics and Well Written Essays - 750 words

Market equilibrium - Research Paper Example Production and consumption of goods and services are influenced by several factors. However, it is worth to note that there are critical aspects of the society that determines demand and supply. In the context of economics, the society is always entangled in a struggle to satisfy its diverse needs with limited resources. Exchange of goods and services constitutes market and is subject to natural or artificial forces (Dwivedi,2010). The goal of the society has remained achieving equilibrium in the market. In other words, market equilibrium is a state of balance between goods and services supplied and demanded. Under this condition prices and quantity are reconciled between the seller and the buyer. For instance, assuming the equilibrium price is Pe and equilibrium quantity is Qe;it mean that the seller and the buyer has consented the quantity and prices. A diagrammatical presentation of a market equilibrium can be shown below.Supply and demand curves.(Fig.1)The figure .1 above shows t he supply and demand curves with the convergent points indicating equilibrium. This Pe represents equilibrium price and Qe representing equilibrium quantity. It is worth to note that the highlighted prices and quantity stated are mutually accepted by the two parties to the agreement. In other words, there are times when the demand and supply of goods shows no tendency to change and this constitutes market equilibrium. The price changes are a function of equilibrium status of the market.

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