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Title: Essay on demand and supply
Description: 1st year Undergrad Accounting and finance essay on demand and supply it is a 1st (76%)
Description: 1st year Undergrad Accounting and finance essay on demand and supply it is a 1st (76%)
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INSTRUCTIONS:!!Complete!all!details!in!Section!1!and!start!your!assignment!on!Page!2
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! ! Save! the! file! as!
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!1123456BS1234)
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!
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Cardiff Business School
COURSEWORK COVER SHEET 2015/2016
!
!
!Section01!(to!be!completed!by!the!student)!
Student0Number:0
C1515372!
Module0Code:0
BS1547!
Module0Title:0
Introduction!to!Economics!
Coursework0Title:0
Semester!Microeconomics!Assignment!!
Submission0
date:0
(Due0by014:000hrs0
on0due0date)0
th
17 !
November!
2015!
Date0
16
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2015!
document0last0
Lecturer:0
(Updated!
saved/printed:0 automatically)!
Professor!Melanie!
Jones!!
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Section02!(!To!be!completed!by!the!Lecturer)!
COMMENTS:0
PPP!
MARK0AWARDED:0
Number!of!words:! 881!
PLEASE0NOTE:00All0marking0is0done0anonymously0by0student0number0so0please0ensure0you0
put0the0correct0student0number0on0your0cover0sheet
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The demand and supply model is used to determine why the market prices increase and decrease
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Looking at sugar using the demand
and supply curve, we can see Change in sugar prices are caused by many factors
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ac
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) The drop in sugar supply due to the 15% production drop in brazil
after a crop failure, lead to an increase in sugar prices as the law of demand predicts (parkin et
al
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This causes the supply curve to shift to the left
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(2014) causing the supply curve to shift rather than being
a movement on the supply curve since there is an actual decrease of supply
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2014)
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The
world market is affected by Brazil’s shortage causing the shift in the market equilibrium (Food
and Agriculture Organization of the United Nations
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According to parkin (2014), the law
of supply states that this would cause the supply curve to shift to the left as shown in figure 1,
and increase the equilibrium price, eliminating a shortage in the market (parkin et al 2014)
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Once the price has reached a point where there is no longer a shortage, the price
eventually comes to a rest at a new equilibrium
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Page!2!of!6!
C1515372!
Introduction!to!Economics!BS1547!
b) Provide an external estimate of the value of the price elasticity of demand and the income
elasticity of demand for your good or service
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11in the US (Food and Agriculture Organization of the United
Nations
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The negative value suggests
demand price has increased due to a positive percentage change in price
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Nonetheless, ignoring the negative sign, sugar is an inelastic good- there is little difference in
demand after price change suggesting it’s a normal good
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If the price was
to increase significantly, people would still buy sugar as it’s a normal good and income inelastic
as it is positive and less than than 1
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This means that the
increase or decrease in sugar demand won’t make a difference towards the price elasticity of
demand
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Page!3!of!6!
C1515372!
Introduction!to!Economics!BS1547!
Secondly, the price of sugar can be affected by its complementary good
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If the price of the commodity (coffee) falls, the price of sugar
will increase or vice versa
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iv) Explain why the information in part b is useful to a business which produces this good or
service
Knowing the price elasticity of demand helps businesses to understand how will the change in
prices effect their total sales
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Price elasticity can also be used
to create market models
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This would eventually effect the business’s total revenue making it a very
important factor for businesses to consider
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A business should be able
to forecast how a change in income would effect the volume of sales
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A decrease in incomes
means the Income elasticity is positive and increase means its negative
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This would help businesses plan
according to the change in markets
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2015)
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figure 2 (Colander, D 2007 page 107)
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Page!5!of!6!
C1515372!
Introduction!to!Economics!BS1547!
References:
Andreyeva, Tatiana, Michael W
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Brownell
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"The impact of food
prices on consumption: a systematic review of research on the price elasticity of demand for
food
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2 216
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C
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C
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7th edition
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Food and Agriculture Organization of the United Nations
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Brazilian sugar
policy[online] Available at
http://www
...
org/fileadmin/templates/est/meetings/sugar_fiji_2012/Alexander_Barros__Brazilian_Sugar_Policy
...
, Powell, M
...
Matthews (2014) Economics (9th edition), Pearson
Title: Essay on demand and supply
Description: 1st year Undergrad Accounting and finance essay on demand and supply it is a 1st (76%)
Description: 1st year Undergrad Accounting and finance essay on demand and supply it is a 1st (76%)