Market Equilibrium

           Do you know what is market equilibrium? Let me tell you about this. Market equilibrium is in a  situation which the current price is equal to quantity demanded and it is a state of balance that happened between two points.

                      The graph above shows the equilibrium price and quantity.When the market is in equilibrium , there is no tendency for the price to increase or decrease.

                  According to the report from Ukraine, the hotel development in Ukraine was booted forward due to the Union of European Football Associations 2012 championship, but now the excess supply is threatening to tackle hotel operating performance. In 2012, despite the UEFA event, occupancy in Kiev dropped to 44% from 54% a year earlier.

             If the price is set too high, excess supply will be created within the economy and there will be allocative inefficiency.The shaded area A is call as surplus that above equilibrium point, which mean the excess of supply.

                  The hotel development in Ukraine having the problem of excess supply which name as surplus. The graph above has describe the situation of the hotel development in Ukraine. When a situation in which the producers are willing to sell more than consumer are willing to buy, it presents excess supply and also name as surplus. It occurs when market price is above equilibrium price.The hotel development in Ukraine are trying to supply more hotels, which they hope to increase profits, but when customers are consuming the hotels will find the hotels less attractive and purchase less because the price is too high.
                  The hotel development in Ukraine should decrease the price of hotel to eliminates exess supply by changing quantity demand and quantity supply until it move to the original equilibrium point.

Written by : Koh Ru Yee 0315289
Resources : http://www.hotelnewsnow.com/Article/10389/Ukraine-struggles-under-excess-supply