Market Equilibration Process Paper
Market Equilibration Process
The laws of supply and demand seem to be a simple concept to understand. In the following paragraphs we will look at how one event in society can change the course of a product that seems to be in an equilibrium state, along with what happens when a product is in surplus or shortage.
On December 14, 2012, a horrific event happened at Sandy Hooks Elementary School that took several lives. Who would have thought that in the same day of this tragedy that ammunition sale would hit an all-time high? The demand for ammunition became so high that stores could not keep ammunition on the shelf. People were scared and feared for their children, but they also felt that the government would start limiting or placing harsh restrictions on ammunition that caused a frenzy. Since there was such a high demand for ammunition the supply became very limited. Many stores that sold ammunition started placing their own restrictions on buying ammunition because they were selling out as soon as the trucks were off loaded causing controversy in the stores. The cost of ammunition immediately increased because the supply was down and demand was up. In Appendix A (a) we see what the market equilibrium looked like before the Sandy Hooks tragedy; the supply and demand was equal. The suppliers where producing just the right amount of ammunition for the demand. Once the tragedy struck, Appendix A (b) and (c) we see what happens to the equilibrium; in both graphs the market equilibrium and price increases. Market price is where the quantity demanded equals the quantity supplied (McConnell, Brue, Flynn, 2009). Even though the tragedy brought an immediate demand for ammunition, manufacturers are still today dealing with shortages in certain types of ammunition.
The ammunition suppliers immediately started trying to produce more ammunition, but most companies were reluctant and...
References: McConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Chapter 3: Demand, Supply, and Market Equilibrium. InEconomics. Principles, Problems, and Policies, Eighteenth Edition. McGraw-Hill Company.
Tarr, J. (2013, April 2). How Manufacturers Are Dealing with the Ammo Shortage. Retrieved from Guns & Ammo: http://www.gunsandammo.com/2013/04/02/ammo-shortage/
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