Concept of marketing equilibrium

Presented by Presented To
Tulsi Rajbhandari Bijya sir
BHM 3 ”A” ppt date : sept 2
Business Economics
 Contents
An introduction
Market equilibrium
Conclusion
 MEANINGS
 Market ???
 Any structure that allows buyers and sellers to exchange any
type of goods, services and information.

 Marketing ???
 The art and science of exploring, creating, and delivering value
to satisfy the needs of target market at a profit.

 Equilibrium ???
 A balance or state of rest with no tendency to change.
 INTRODUCTION
 Also known as price determination.
 One  price at which buyer and seller transact which is also called
equilibrium price or the market clearing price.
 Equilibrium simply means a balance or a state of rest with no
tendency to change.
 Market equilibrium is a market state where the supply in the
market is equal to the demand in the market.
 If a market is at equilibrium, the price will not change unless an
external factor changes the supply or demand, which results in a
disruption of the equilibrium.
 Market equilibrium

Equilibrium price or marketing clearing price is

determined by the interaction of two opposing interests
i.e. (demand and supply curve) .
As demand and supply curve have the same axes , viz ,
price and quantity , both can be combined in single
diagram.
In the diagram below,
“P” is market clearing price , “Q” is the equilibrium
quantity and “E” is point of intersection where demand
equals to supply (D = S)
FIG : Equilibrium price

S>D
Excess supply

D=S

D>S
Excess Demand
 The demand curve shows the consumer’s preference, that is more
will bought at lower price.
 On other hand supply curve, shows that less will be supplied at
low price.
 Given these diverging preferences , the two curves have
diametrically opposed slopes, and they also intersect with each
other at price “P ” and quantity “Q” and also “E” equilibrium
point where ( D = S) .
 Thus the consumer are willing to buy “Q” quantity at the price of
“P”, and the seller is also wiling to sell the same quantity at the
price of “P”.
 As quantity demand by buyer is equal to quantity supplied by the
seller at price of “P”
 Hence, the equilibrium price is called market clearing price.
Equilibrium refer to a state of rest to balance even if
there is a change in the original equilibrium would be
restore by the interaction of supply and demand.
Changes from equilibrium price further shows either
excess demand or excess supply.
 Conclusion

Demand and supply are the two most important concepts

used to explain the market mechanism or the behavior of
the market economy.