Professional Documents
Culture Documents
Semester 2
Session 2015/2016
Prepared By :
Bil
Name
Matric Number
Course
1.
BG15110393
HE20
2.
BG15110394
HE20
3.
BG15110385
HE20
4.
Elsie Luther
BG15110112
HE20
5.
BG15110135
HE20
Prepared To :
Miss Nur Shahirah Binti Azman
TABLE OF CONTENT
Page
1.0
Introduction
2.0
3.0
4.0
2.1 Price
2.2 Seasons
2.5 Expectations
3.2 Seasons
3.4 Expectations
A supply-and-demand graph
4.1 Supply of Bananas
2
4.2 Demand of Bananas,
Apples and Grapes
5.0
Conclusionm
10
6.0
The Article
11
7.0
Reference
1.0 Introduction
In economics view, demand is the expressions of willingness and abilitiy of a
potential buyer to acquire certain quantities of an item for various possible prices
the buyer can reasonably offer. Demand can be thought of as a schedule of
prices and quantity in the mind of the buyer. In addition, the law of demand
postulates that the relationship between price and quantity in the mind of buyers
is inverse. Moreover, the law of demand is represented grapichally by a
downsloping demand curve and it is also explained by the diminishing marginal
utility, the income effect, the substitution effect and with the help of indifference
curve analysis.
While on the other hand, supply is a willingness and ability of sellers or
suppliers to make available different possible quantity of a good at all relevent
prices. In addition, the law of supply postulates that the relationship between
price and quantity in the mind of sellers or producers is a direct one. When prices
increase so does quantities. Moreover, the law of supply is explained by price
being an inducement for sellers or producers to sell more and also cost of
production increasing due to the law of diminishing returns.
Additionally, equilibrium3is the price and quantity whereby demand and
supply intersect. At any price above that equlibrium, the quantity supplied
exceeds the quantity demanded, which result in a surplus and no transaction
between seller and buyer. In contrast, at any pice below, the quantity demanded
exceeds the quantity supplied, which results in a shortage. Thus, only at the
intersection of demand and supply are the quantities demanded and supplied are
equal whereby the price and quantity equlibrium are stable.
Referring the article, there were a significant changes of the demand and
supply of bananas, apples, grapes and an oranges in a market of South Indian
households. This is generally due to the factors that influencing demand such as
prices of other goods whereby there is an increasing and unpredictable changes
in the market price of those fruits. Furthermore, the cost of production and the
price of the good is affecting the supply of those fruits. Last but not least, there
were an uncertain changes of demand and supply of South Indian market due to
its determinants factors.
the seasons of orange the productivity of the Orange is high. The society will
take advantage of the cheap price of Orange and they will bought in large
quantities. If there no season for the Orange the price will back to normal or the
price will increases because the productivity of Orange will decreased. The
demand will decreased because the changing in the price due to the decreased
in productivity of Orange.
2.3 Substitute
Substitute is a good that can serve as replacement for one another when the
price of one increases demand for another will increase. The article show orange
is a substitute for the bananas, apples and grapes. When the prices of the
Orange more cheap than the price of the substitute the quantity demand for
Orange will increase. The society will make comparison between the price of
Orange and price of substitute. In this article the society will choose to buy for an
Orange because the price of Orange more cheap than the price of substitute. The
quantity demand for Orange will increases and the quantity demand for
substitute will decreased. Meanwhile, when the price of the substitute more
cheap than the Orange the society will choose to buy the apples, bananas, and
grapes and the quantity for Orange will decreases.
today. When the expectation society about the price of orange will decreased in
future they will decreased the quantity that they might buy todays and the
demand will for orange today will decreased. Meanwhile when the society expect
the price of orange will increase in the future they will increase the quantity of
the orange that they buy and the demand for orange today will increase.
Expectation of society will affected the demand of good whether the quantity
demand will increased or decreased based on the expectation that the society
made.
Besides, the other factor that shift the supply curve is the producer goals. Each
firm or producers have their own production goals. If their goals is to maximize
the selling for increase social welfare, the firm or producer will increase the
quantity supplied of goods or services. But, their goals is to maximise their profit
or to dominate the market, so the firms or producers will decrease the quantity
supplied of goods or services. In the article, we can see that the producer for
orange produce more orange and supplied a large quantities of orange in market
because they will get a higher profit by selling orange. Moreover, the price for
orange is more cheaper than the price for the other fruits.
3.4 Expectations
The expectations of future price also one of the factor that could shift the supply
curve. The expectations of changing in price for the future also effect the firm or
producers desicion in the quantity supplied by them. The supply for the orange
definitely high for that year because the demand for orange is more than the
other fruits due to the price for each fruits. However, Liaqat Ali ,owner of AB
Vegetables and Fruits says that it is too early to predict supply and demand for
orange. So, in this case the producers for orange still have to wait until JanuaryFebruary for the demand for orange goes up.
3.5 Substitutes goods
The last factor that could shift the supply curve is substitutes. Substitutes good is
define as goods that can serve as replacements for one another. It happen when
the price of one increases, then the demand for the other also increases. For
example, the banana which used to sell at Rs30-40 per kg in the past year are
now retailing at Rs50-60 per kg because the productions of banana decrease
when the banana plantations were damaged by the heavy rains in Kerala. When
the price of banana is increase, consumers prefer to buy orange because the
price for orange is cheaper than banana.
S
S
Price of banana
(per kg)
0
Q
Quantity of
banana
Price of banana
D
D
Quantity of
banana
P0
E
Q
E
Q
Quantity
Price of orange
(per kg)
5.0 Conclusion
10
Based on all of the factors that have be effect the demand and supply of market
of orange we can conclude that market of goods or service will shift to the right
or to the left depand on the factors. Demand curve will shift to the right if there
have an increases in demanded and will shift to the left if there are decreases in
demanded. There are same for supply curve.
Factors that could shift the supply curve include chnage in preference,
change in income, changes in technology; or changes in the number of firms in
the market. But as we can see for market of orange, the main factor that shift
the supply curve is the seasons. In the same time, due to the seasons, price of
banana had increase and this were lead producer to produce more oranges
cause oranges have less cost of production than banana. This show that banana
is the substitute good for oranges that make the demanded of oranges increase
when its price increases.
Last but not least, because of the market of oranges that have becomes a
favourite fruit for that season and had increases in demanded and supplied make
the other fruits such as apples, bananas and grapes are decreases in demanded
and their supply-and-demand curve will shift to the left.
11
With costly bananas, apples and grapes, orange becomes favourite fruit this
season
(http://articles.economictimes.indiatimes.com/2013-1219/news/45377538_1_oranges-diesel-prices-supply-and-demand)
13
Reference
PK Krishnakumar & Sulanuka Ghosal. (2013). With costly bananas, apples and
grapes, oranges becomes favourite fruit this season.
http://articles.economictimes.indiatimes.com/2013-1219/news/45377538_1_oranges-diesel-prices-supply-and-demand