Market distortions occur when external factors interfere with the natural equilibrium of supply and demand, leading to inefficiencies and suboptimal allocation of resources. These distortions can arise from government interventions, monopolistic practices, or information asymmetries, often resulting in welfare losses and reduced market efficiency.

Market Distortions

External factors are influences that originate outside an individual or organization, affecting decision-making, performance, and strategy. These factors can include economic conditions, social trends, regulatory changes, and technological advancements, all of which require careful analysis and adaptation to maintain competitive advantage.

External Factors

Natural equilibrium

Supply and demand is a fundamental economic model that explains how prices are determined in a market based on the availability of goods (supply) and the desire for them (demand). When demand exceeds supply, prices tend to rise, and when supply exceeds demand, prices tend to fall, reaching an equilibrium where supply equals demand.

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