Question

discuss and provide application of concepts of supply and demand by identifying two goods and two services you consume at the household or professional level. For each example, you will identify a demand-shifting factor (preferences, expectations, income) and a supply-shifting factor (entry/exist of a producer, cost of input, etc.) Based on each factor/scenario, please discuss the impacts to the equilibrium price and quantity further include actual reporting of the scenario relating impacts on the industry from the scenario-based adjustment from research. For example, for the gasoline industry, a scenario could be civil unrest emerging in Saudi Arabia, since they are the largest exporter of gasoline, this would impede gasoline supply. The reduction in gasoline supply would shift the curve to the left and holding demand constant create a new equilibrium price and quantity. In your response, please research and report actual quantitative information (charts, tables, and graphs) for industry data tied to your example.

Answer 1

2 goods consumed at households can be :

1. Pulses

Demand shifting factor : Due to shift in diet pattern (preferences) of consumers. For example a vegetarian starts eating meat. He will have more options of food and will reduce his consumption of pulses. This will shift the demand curve towards left and bring down equilibrium price and quantity.

Supply shifting factor : Due to technological advancements. Better technology machines will help in efficient production/harvest and will increase market supply. Shifting supply curve towards right bringing down price and increase in quantity demanded.

2. Chocolates

Demand shifting factor : Due reduction in income levels. An unfavourable change will shift the demand curve towards left and bring down equilibrium price and quantity.

Supply shifting factor : Due to technological advancements. Better technology machines will help in efficient production and will increase market supply. Shifting supply curve towards right bringing down price and increase in quantity demanded.

2 services consumed at home :

1. Domestic Help

Demand shifting factor : With increasing female employment rate, demand will rise shifting demand curve to right leading to higher demand in quantity and also an increase in their wages.

Supply shifting factor : Due to decreased income levels, they start switching to some other work,( The supply curve shifts left) prices will rise and demand thus reduced at new equilibrium point.

2. Newspaper provider

Demand shifting factor : With increased literacy rate, demand for newspaper delivery rises, demand curve shifts right causing rise in equilibrium price and quantity.

Supply shifting factor : Due to increased petrol prices, they start charging higher as their costs rise, (The supply curve shifts left) equilibrium prices will rise and demand thus reduced at new equilibrium point.

COVID IMPACT ON RETAIL

With the COVID Impact, the preferences of consumers changed. Instead of buying fresh fruits and vegetables, the consumers demanded pulses to avoid daily vendor contact. This lead to an increase in demand of pulses due to change in tastes and preferences of consumers. In India, The prices for Arhar Dal rose from Rs 6000 per quintal to Rs 6400 per quintal.

Increased demand and same supply lead to a price rise.