Problem: Understanding how market equilibrium is maintained is essential for business managers. As a manager, it is important to understand how economic principles, and specifically supply and demand, are a part of your everyday business decisions.
Explain the market equilibrating process and compare the demand for food with the demand for Starbuck's coffee. Include academic research to support your ideas.
Consider the following components in your explanation:
- Law of demand and the determinants of demand
- Law of supply and the determinants of supply
- Efficient markets theory
- Surplus and shortage
Create graphs illustrating the equilibrating process in price relation to the shift in supply and demand.