Market Equilibration Process Paper

Market Equilibration Process Paper
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Institution
Date of Submission
Market Equilibration Process Paper
Equilibrium is the process of movement between two equilibrium points resulting from some change in demand or supply. This paper describes a real world experience from the free market highlighting the changes that occurred from demand or supply due to world events, which led to the urge for a movement between two equilibrium states. This paper will also explain the process of how this movement comes to be using behavior of suppliers and consumers. Rice is important to the nutritional and ritual needs of Indonesia. In 1997 pestilence, drought, and a financial crush resulted in disruptions in rice availability (Tabor and Sawit, 2001). The government programs to minimize the rice price were insufficient in this period.
Prior to this period, Indonesia had made great steps in reducing food insecurity and poverty. In fact, most people entered into poverty due to economic downturn and a survey showed that poverty headcount rose from 23 million to 50 million (Tabor and Sawit, 2001). This research noted that absolute poverty in this country is closely related to malnutrition and food insecurity. Additionally, Indonesian policy makers have always defined food security as the country’s ability to offer its citizens sufficient rice supplies at affordable prices. Having such limitations has led these people to add protein rich foodstuffs like beetles and bugs in their diets. Further, during 1998, in trying to explain the serious manner of the crisis, urban food riots, surging poverty levels, and high food imports levels indicated signals that the food security systems were serious compromised. The response of the government to the food supply decline during this period was to authorize sweeping controls on marketing and trade (Tabor and Sawit, 2001).
Faced with increasing gaps between international and domestic food prices, without mentioning the increased taxes on trade that ended monopoly in imports, quantities of various basic foodstuffs and rice we...