Understanding how market equilibrium is maintained is essential for Research Proposal

Understanding how market equilibrium is maintained is essential for business managers - Research Proposal Example et equilibrium in a free market environment refers to the time when the quantity of goods supplied in the market balances the demand level in the market. An equilibrium market does not encounter the challenges of excess supply as well as excess demand. In an equilibrium market, buyers and sellers have expounded understanding of the prevailing prices of goods and services as well as the quality of goods and services on offer. Clear knowledge of the prevailing market trends expels any attempts by particular sellers to increase their prices above the market value. A good knowledge of how to maintain market equilibrium is essential for most managers when making decision on the quantity of goods top supply to the market. Insight understanding of market equilibrium also assists in decision making on the methods of production to be employed. Business managers ought to have deep understanding of the laws of demand and the determinants of demand. The law of demand states that demand of a particular commodity increases with increase in quality and decrease in price. Since the sole purpose of every business organization is to increase sales volume and make more profits, business managers have no option a part from operating as per the guidelines of the law of demand. In this regard, business managers need to set their operation to ensure production of high quality products that will pose a good competitive advantage in the market (Rothbard, 2006). Improving quality of goods produced by a business organization, promises good sales volume thereby lifting the profit margins of an organization. Similarly, reducing costs of goods on sale by a business organization attracts more demand for that particular product. When demand for a product increases, it is automatic that the particular product will record high and fast sales thus improving the profits due to that product. Demand also increases with increase in the household income. Tastes of particular products also affect the