Question

Assignment Description

In this assignment, we are going to analyze the changes in market demand and market supply for a commodity (a good or a service). In addition, we will also analyze how the changes in demand and supply affected the market price and production of this commodity. To do so, we will are going to address the key factors (determinants) that have caused the shift in demand and/or the shift in supply. The goal here is to provide an objective analysis of the forces that have caused this change in order to better understand the behavior of the market and to determine the potential growth or decline for this commodity. Some of the commodities that have experienced a drastic change (an increase or a decrease) in supply and/or demand in recent years are organic foods, cage-free eggs, social media, higher education, online education, healthcare services, online banking, online shopping, DVD players, digital cameras, fidget spinners, health clubs, bottled water, landlines, Cash for Gold, and fried food. You could use one of these commodities for your study or choose one you are familiar with or prefer.

To start, select a commodity that you wish to analyze to determine changes in its market demand, market supply, equilibrium quantity (output), and equilibrium price.

Your research should be structured with consistent and clear thoughts. It should be supported by facts and data, and you must base your results on these facts. Your conclusions should be thorough and based on your findings and understanding of supply and demand determinants.

Writing Style and Page Number Requirements

Font Type: Times New Roman or Arial

Font Size: 12

Spacing: Double

Number of Pages: Four to six pages, along with a separate Title page and a separate References page

Answer 1

TITLE PAGE : Supply and Demand of Organic Foods

Organic foods are pesticides free food materials which are good for anybody's health. In today's scenario, when there are large number of cases of cancer growing year after year, people are switching to organic foods. Due to nil content of pesticides in the food, such food materials are safe for consumption. Thus there is a rising demand of organic food in the market in the last few years.

At the same point of time, As the awareness towards organic food is growing and people's inclination towards organic foods, the farmers are also growing organic foods in large quantities.

Sales of organic food is growing at a very fast pace rising from $3 billion in 1997 to more than $10 billion in 2003. It is observed that sale of organic food have grown by 10 percent every year and industry's hare of US Food market is expected to grow from 2% to 3.5% by the end of this year.

The increase in demand is attributed to various factors like :

• Increased awareness amongst the population towards the benefits of organic foods
• Potential benefits of consuming organic foods like good health, less cases of cancer, and other diseases
• Growing level of consciousness towards good health amongst the people.

Although the demand of organic foods is growing at a fast pace, the supply is still slow in the market. Once an exporter of organic foods, US is now spending $1 billion annually to import the organic foods. The ratio of import to export of organic foods is 8:1. This is mainly attributed to the below mentioned factors :

• Many of the farmers are still doubtful about the potential surge in the demand of organic foods and are still relying on traditional crops of farming.
• Unawareness amongst the farmers about learning the details of organic farm management and training needs to be offered.
• Long transition period of moving from inorganic to organic farming.
• Usage of farming practices like crop rotation instead of antibiotics, growth hormones and synthetic pesticides, for which farmers are not quite used to.

As a result, the supply of organic foods is quite low compared to its supply. The condition was just reverse in the past, when due to low awareness level and health consciousness amongst the consumers the demand of organic foods was low compared to its supply.

Considering the past scenario, the demand was low and supply was also low. The equillibrium price and quantity is as :

As a result of increased awareness and health consciousness, the demand of organic foods have increased considerably and the demand curve shifts rightwards. As a result the equillibrium price has increased from P to P' and equillibrium quantity has increased from Q to Q'.

References

Demand for Organic Food growing faster than domestic supply Available at : https://www.organicconsumers.org/news/demand-organic-food-growing-faster-domestic-supply