In economics, individuals will tend to study the existing dimensions in the market so that effective buying and selling can be done. In this paper we shall discuss the major issues surrounding market operations. In the paper, there is a detailed definition of the term market. The paper goes ahead to describe some of the common markets in the United Kingdom. There is also a brief analysis and explanation of the concept in equilibrium quantity and price. This has been used in explaining how the price of a commodity would come at an equilibrium point even in a competitive market.
Introduction: Market and Equilibrium
Buyers and sellers come together in markets. Goods and services are exchanged for a price. Prices will be forced up or down depending on the state of the market. Demand and supply diagrams provide a tool for analysing the effects of supply and demand in equilibrium price and quantity. Through the use of the above statements, we shall note that there are several intertwining factors in the market place that dictate the other. Basically, the issue of coming together with the intention of selling and buying would end up creating what we call a market. It is right in this market that has seen different individuals with the intentions of selling and buying coming together hence forming a market. These individuals who have come together will either be having goods or services which they want to sell, while the other individuals who comprise the buyers would be willing to purchase the services or goods that have been made available (Donahue, 2002, p. 12). This exchange of the goods or the services shall be done at a specified price which sees both parties comfortable with. Depending on the availability of the goods and services, and other market situations like the rate of demand of the buyers, the prices would keep on shifting up and down until a particular equilibrium that favours the two parties. This paper shall be based on the important terms of the market place.
What is meant by market?
When it comes to marketing terms, we shall see that the term market shall be defined or used in reference to a group of individuals whom are consumers or in a similar organisation who have assembled in a given place with the interest of purchasing some kind of goods, products or services found in that place due to the continued supply by the sellers (Bangs, 2002, p. 32). The individuals constituting the purchasers or the consumers should be having the appropriate resources that can purchase the products. In many cases, the market would be permitted by a number of regulations and laws which govern the purchasing and selling strategies. In majority of the cases, it has been noted that the definition of a market shall begin with the entire population then progress farther down as shown in this diagram.
Shedding some light on this, it should be understood that the size of a marker cannot be fixed. For instance, there would be a number of changes, legislations supply, and these would result in shifting the size of the market. In order to effectively define a market, the first thing should be in defining and analyzing the market because the market composition would tend to differ.
Markets in operation in the United Kingdom
There are very many kinds of markets that have been in operations in different parts of the world. This has been dependent on the economic situation, the economic activities taking place in a given country or society, and the poverty levels. Just to say it, there are very many factors that would influence the kind of markets that would develop in a given economy. There are a number of markets that have been in constant operation in the United Kingdom for the last many years. For instance we have been having a strong Cell phones market in the country. Many people have been willing to purchase mobile phones as technology continues to grow. Some of the major features with this kind of market is that majority of the people have been willing to purchase the web-enables phones which can meet most of their requirements (Henderson, 2004, p. 56). The market has been registering increased sales over the last few years and as more manufacturing industries continue to be established. There are also a number of markets dealing with agricultural products.
The other kind of common market is web-based. There has been a lot of internet trading whereby even the individuals might not be aware of each other. This has been facilitated by technology and internet. This has become a common kind of business and a market itself in the United Kingdom. Majority of the markets in the country are vertical markets in which majority of the individuals have been highly engaged in carrying out trade in which one is only after a number of goods and needs that have been specialized. Examples inclusion the automobile and aviation industry, and banking among others. As well, there is a pronounced occupation of horizontal markets in the country (Henderson, 2004, p. 59). With this kind of market, there would be the need for a particular commodity to have a number of vertical markets within itself. This kind of markets would be complex and are as well quite common in the United Kingdom.
Concept in Equilibrium Price and Quantity
The use of equilibrium is something common in business. Economic equilibriums will basically show a state in which two economic forces will become balanced, and where no external influences would come into play (McQuarrie, 2006, p. 120). Generally, the equilibrium would be the point in at the quantity being demanded would be equivalent with the quantity being supplied. This would be the same thing with the equilibrium price and quantity. The price-quantity equilibrium would be greatly impacted by the demand and supply that exists in the market place, as shown in the diagram below.
According to McQuarrie (2006) “the demand and supply graphical curves are the representations of what we see in relationships between the commodity’s price and quantity.” The commonly applied equation for a straight lines give the demand curve, and would be represented as P = x –yQD. The ‘x’ will be on the vertical axis and will give the intercept on the y axis which will be a slope. In economics, if the price will high as $x, the consumers would be in demand of zero units; y makes the rate through which the price should fall if the quantity to be demanded can increase even if by a single unit (McQuarrie, 2006, p. 121). ‘x’ will then be positive, and therefore a (-) minus on y to show that the quantity demanded is inverse to the cost/ price.
According to McQuarrie (2006) “The common equation when dealing with a linear curve for supply would be P = r + tQS, where r would be vertical axis intercepting the supply curve, and with t being the slope. Economically, we shall have producers offering zero units in selling should the price fall down to about $r, and t being the rate through which the commodity’s price has to rise if the supplier is to produce so as to increase supply.”
So as to find the equilibrium for price, addition of a condition such as the quantity demanded is the same as the quantity supplied. QS = QD =QE. Therefore, so long as we have the greatest of the consumers willingly to pay for a given price (x) which might exceed the low price in which the producers would be willing to offer some output (r), then the equilibrium price would remain positive: (x-r)/(y-t) > 0
From the above explanation, we should see that the price would come to settle at equilibrium even when the market is competitive. This is because there would be equal volumes of supply which would counter the demand of the people. This would result in a constant available quantity, and thus modulating the price, hence bringing it to settle at equilibrium. It shall be seen that the application of economics can be effective towards economic performance and especially when applied in a given market (Treacy & Fred, 1997, p. 54). This would make sure that the supply and demand curves have been retained at equilibrium hence improving the market operations so that the each and every individual would be in a position of getting what he or she requires from the market. Through the use of principles of economics, one can study the market trends properly and come up with necessary approaches through which the greatest gains can be obtained from the market. This would improve sales, and monitor production so that goods may not be wasted on unwilling buyers.
Bangs, D., 2002. The market planning guide: creating a plan to successful marketing. Longman, London.
Donahue, J., 2002. Market-based governance: supply side, demand side, upside, and downside. Cambridge: Cambridge University Press.
Henderson, H., 2004. Supply and Demand. Oxford: Oxford University Press.
McQuarrie, E., 2006. The Market research toolbox: a concise guide for beginners, London: Allyn and Bacon.
Treacy, M. & Fred, W., 1997. The discipline of market leaders: choose your customers, narrow your focus. Cambridge: Cambridge University Press.