scenario concept
Scenario Concept
JOSE E ORTIZ ANDINO
ADELAIDA TORRES-DILAN
ECO/561PR - ECONOMICS
Scenario Concept
The purpose of this paper is to explain the market equilibrating process in relation to my personal experience supported by academic research. The following factors will be included in my explanation: law of demand and the determinants of demand, law of supply and the determinants of supply efficient markets theory and surplus and shortage.
Market Equilibrating Process
Not since the Great Depression of the late 1920’s that carry over into the 1930’s has the United States experience an economic downfall like our current economy recessions that we are recovering from that started in 2008. Understanding what an economic depression is will help individuals deal with their own economic experiences. Economics is the social science that examines how individual’s institutions and society make optimal choices under conditions of scarcity, (McConnell, Brue, Flynn, 2009). The two stakeholders that contribute to the market equilibrium process are the supply from the producer and demands from the consumers. The equilibrium process is equal when the producer and consumer needs are balance.
Producers and consumers competition off sets the equilibrium process, producers with larger inventories are force to decrease their prices to undersell their competition. Consumers benefit from this because; more choices are available to fill their desires. When a price falls, quantity demands increases and quantity supplies decreases.
Efficient Market Theory
Market rise and falls sometimes analysis are right in their prediction, other times they are wrong. According to Fama “An "efficient" market is defined as a market where there are large numbers of rational, profit-maximizers actively competing, with each trying to predict future market values of individual securities, and where important current information is almost freely available to all
JOSE E ORTIZ ANDINO
ADELAIDA TORRES-DILAN
ECO/561PR - ECONOMICS
Scenario Concept
The purpose of this paper is to explain the market equilibrating process in relation to my personal experience supported by academic research. The following factors will be included in my explanation: law of demand and the determinants of demand, law of supply and the determinants of supply efficient markets theory and surplus and shortage.
Market Equilibrating Process
Not since the Great Depression of the late 1920’s that carry over into the 1930’s has the United States experience an economic downfall like our current economy recessions that we are recovering from that started in 2008. Understanding what an economic depression is will help individuals deal with their own economic experiences. Economics is the social science that examines how individual’s institutions and society make optimal choices under conditions of scarcity, (McConnell, Brue, Flynn, 2009). The two stakeholders that contribute to the market equilibrium process are the supply from the producer and demands from the consumers. The equilibrium process is equal when the producer and consumer needs are balance.
Producers and consumers competition off sets the equilibrium process, producers with larger inventories are force to decrease their prices to undersell their competition. Consumers benefit from this because; more choices are available to fill their desires. When a price falls, quantity demands increases and quantity supplies decreases.
Efficient Market Theory
Market rise and falls sometimes analysis are right in their prediction, other times they are wrong. According to Fama “An "efficient" market is defined as a market where there are large numbers of rational, profit-maximizers actively competing, with each trying to predict future market values of individual securities, and where important current information is almost freely available to all