Question

Shortly after the US announced a release of petroleum from the Strategic Petroleum Reserve coordinated with several other countries, Canada announce that they too would be tapping in to their strategic reserves... of Maple Syrup. The Federation of Quebec Maple Syrup Producers, which produces more than 75 percent of the world's maple syrup was formed in the 1950s to regulate the production and sale of maple syrup and help maintain a stable price for maple syrup producers. This year there was a rather short harvest season and a 21 percent increase in demand. This resulted in a significant shortage which precipitated the release of 50 million pounds of maple syrup from the strategic stockpile. With the release of nearly half of the country's stockpile, producers are planning ahead to next year to tap more trees and increase supply. If the harvest season is short again, they will hopefully be able to meet market demand. If the harvest season is better, then they can simply resupply the reserves.

Discussion Questions:

1. Would you expect demand for maple syrup to be elastic or inelastic? Explain your answer.

2. Based on your answer above, what impact would increasing supply and lowering price have on producers' revenues?

3. The Federation of Quebec Maple Syrup Producers is a legally sanctioned cartel. Discuss how their regulation of supply affects consumer and producer surplus compared with the outcome that would be achieved if individual farmers competed with each other.

Answer 1

1.

The quantity demanded increases if indeed the method produces an exact number larger than one. To put it another way, quantity moves quicker than price. Relatively inelastic if the quantity is below one. To put it another way, quantity varies more slowly than price.

 

Which one of the preceding is a good elastic demand instance?

You won't be able to boost your income by raising your pricing if your product is price-elastic. The amount requested will drop as soon as you boost your pricing even little. Luxury items such as gems, money, and high-end automobiles are examples of completely elastic things.

 

2.

The price mechanism is an economics theory that describes how market forces connect and this affects the market of offerings. When markets are competitive for an item purchased, prices come down. This is a sound economic premise. Prices are rising when goods become more expensive.

 

When need is equal, the quantity and value of offerings have an inverse correlation. Costs tend to decrease to a lower market equilibrium and a greater equilibrium volume of products when supply for services increase while demand remains constant. If the supply of products and services falls but demand remains constant, Cost is going to climb to a greater price level with fewer products and services available. The automobile is in high demand. As a result, the corporation lowers prices of the automobile to $150,000 in balancing supply side for such vehicle and eventually establish a price level.

 

 

The supply of products does have the same negative connection. If economy expands but supplies stays constant, the boom period results in increased equilibrium quantity, and conversely.

 

Producers and consumers change until a market balance is achieved. Assume a premium vehicle manufacturer controls the price of their new model at $200,000. While the initial estimate for the automobile may be great owing to the company's marketing efforts, most people are unwilling to spend $200,000 on a vehicle. As a result, sales of the new product plummet swiftly, resulting in an oversupply and pushing down prices.

 

3.

The Organization of Quebec Maple Syrup Exporters (FPAQ) is a govt private organization that controls maple syrup manufacturing and commercialization in Quebec. The FPAQ supplied 94 percent of Maple syrup syrup and 77 percent of global supply in 2011.

 

The FPAQ aids in the collective advertising of maple products as well as the organisation of sales both inside and beyond of the province. Some people believe it's a cartel.