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It was found experimentally that Market has to re-establish Equilibrium via Market mechanism. Such that Market equilibrium is a desired status in the market where both suppliers and Consumers will tend re-establish market equilibrium (through demand & Supply) undeliberately.

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Q: Why will market equilibrium be re-established once disturbed?
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Why does the time it takes to reach equilibrium vary from market to market?

It takes time to reach the equilibrium because they don't know what is the "right price" to sell the product. whether prices change quickly or slowly however once they move toward equilibrium shortages and surpluses start to disappear.


What will cause a change in equilibrium price?

The equilibrium once disturbed by a price change, reacts based on which direction the price was changed. Higher prices reduce demand and increase supply, while lower prices increase demand and lower supply.


What is a naturally correcting market?

A nationally correcting market is a market that corrects itself, such as the real estate market or the job market. In the past, once an upcoming presidential election is about to occur, the job market goes down. Once the President is elected and has been in office for awhile (hard to determine how long, the job market eventually climbs back up). In other words, jobs will be available.


Why the market is unstable at consumer equilibrium?

There are many reasons why a consumer market equilibrium may be unstable, and it depends on which school of economic thought you follow. Generally, if there actually is a consumer equilibrium (which some believe does not truly occur) then what will cause it to become unstable is the effect of random shocks: I.e.) let future consumption for any period be ct+j = ct + Et. E is a random shock variable which is normally distributed around the mean (which we'll assume to be 0). Consumption in any period is simply equal to consumption in the period of time = t plus whatever shocks occurs in the economy (i.e.) political unrest, social movements, oil crises, etc.). In an economy, small shifts in variables such as consumption can cause larger changes because once an economy moves away from equilibrium, it causes a resulting change in other key equations which is no longer optimal. How the economy restores to equilibrium is also a debate amongst economist: Keynesians believe that wages/prices are 'sticky' and thus equilibrium is slow to reoccur after a shock; classicists believe that wages/prices are not sticky so that equilibrium will reestablish itself quickly. The rate at which an economy corrects these shocks will also affect how unstable equilibrium is. Finally, equilibrium can also constantly change due to factors such as technological growth. The economy needs time and information to adjust to these new equilibria and this can cause instability.


What is the perfectly competitive equilibrium price and quantity?

In a real life, one can never achieve perfect equilibrium of price and quantity. Those are relative terms and can be better understood on paper. Equilibrium of price and quantity is primarily driven by demand. In short, the more demand is accompanied by increased supply. Once the increased supply outstrips the demand, the prices come down to meet the lower demand. When the prices are low, people will want to buy more, which increases the demand of a commodity. This is a never ending cycle and thus a perfect equilibrium of price and quantity is not achieved. A perfect equilibrium means the supply is in a perfect balance with demand resulting into stable prices. A manufacturer can never produce 963 products to meet the exact demand of 963 products. To find it, it is where Price=Marginal cost

Related questions

When the stabilized state of an equilibrium system is altered further chemical reactions begin until a new equilibrium is reached?

Yes, once the equilibrium of a system is disturbed, the system will react to establish a new equilibrium. This involves shifts in the forward and reverse reactions to minimize the disturbance and reach a stable state again.


Why does the time it takes to reach equilibrium vary from market to market?

It takes time to reach the equilibrium because they don't know what is the "right price" to sell the product. whether prices change quickly or slowly however once they move toward equilibrium shortages and surpluses start to disappear.


Do not require any power of force to maintain their field?

Objects that do not require any power or force to maintain their field are considered to be in a state of equilibrium. Once an object is in equilibrium, there are no external forces acting on it and its field will remain constant until disturbed by an external force.


What will cause a change in equilibrium price?

The equilibrium once disturbed by a price change, reacts based on which direction the price was changed. Higher prices reduce demand and increase supply, while lower prices increase demand and lower supply.


How does a system respond to change once it has reached equilibrium?

At equilibrium its not changing (any more).


Do random movements of molecules stop once equilibrium is reached?

Yes. Equilibrium is when the movement of molecules stops and equals out.


How long does it take for ants to make a line once disturbed?

about 5 seconds


Does diffusion ever stop?

Diffusion will continue as long as there is a concentration gradient present. Once equilibrium is reached and the concentrations are equal throughout, diffusion will stop.


What can eye do to feel happy after feeling distrubed?

To feel happy after feeling disturbed it is probably best to deal with whatever was making you feel disturbed in the first place. Once the problem is resolved you will likely get back to feeling happy again.


What animal helped stop the Plague?

i think they used blind puppies to 'stop' the plague Cats - once they were reestablished (they had been outlawed as "witches' familiars"), since cats kill rats and rats spread the Plague.


How much money did Once gross domestically?

Once grossed $9,445,857 in the domestic market.


If a reaction is at equilibrium and you add reactants what happens?

If you continuously add reactants even after the reaction has attained the equilibrium then according to Le Chatelier's principle, the reaction will again proceed in forward direction in order to neutralise the reactants and once again the attain the state of equilibrium.