Group items tagged

The article Catfish Farmers Fight Fish Glut and High Fee Prices centered on the left shift in demand for catfish. There has been a steady decline in the demand for catfish in the last decade, causing its demand curve to keep shifting left. Last year, the supply of catfish was low which in turn led to higher prices (due to its scarcity). These higher prices led people to substitute (determinant of demand) catfish with other goods such as inexpensive imports or similar species of fish. The catfish industry has not been able to recover. This year (2012) the supply of catfish has managed to surpass the demand. The high supply led to cheaper catfish costs this year, which in theory should have led to more demand, however people seem to be sticking with their substitutes despite the price change. The feed prices for catfish (feed being a factor of production) are at an all-time high which is causing farmers to suffer; with high costs of production and low prices, they are receiving little profit. With the whole industry suffering, the government has decided to purchase 10 million dollars' worth of catfish hoping to act as a positive determinant of demand (trying to shift the demand curve to the right). This has not had a great effect on the catfish industry and people are starting to question its value; whether people are willing to buy catfish. The declining of this industry has already led to many catfish ponds being replaced with new crops.

This article was about the decrease in demand for catfish due to substitution and a change in taste and preferences by consumers. This has caused the demand curve to shift to the left. Because it has shifted left, the price of catfish has decreased therefore signaling that catfish is not as scarce as it used to be and its value has decreased. How have consumer incentives been impacted by this? Because the price has decreased and the good has become less valuable, people would be more inclined to buy it due to the lowered price. How would producers be impacted by this? As demand has decreased the price has decreased, and the lower the price the lower the quantities of goods firms are willing to supply. Therefore the supply of catfish will decrease. This demand shift will have a negative effect on substitute markets as consumers may find the price of catfish cheaper which may lead them to switch from their product to catfish. Lastly, how will this impact resource allocation? As there is a decrease of demand, therefore a decrease in supply, less resources will be used for the catfish industry and invested in other more profitable markets.

This article discusses the reasons which have resulted in a fall of fertilizer demand in India. The author states that the demand for fertilizer will drop 1/5  from 54.6 million tons  to 24 million tons by 2013. Additionally companies supplying fertilizers to the public have already experienced the first signs of decreasing demand and have been confronted with 50% decrease in potash consumption and a 30% decrease in the phosphate consumption.  Indian Companies supplying fertilizer had raised their prices the previous year due to record sales however these prices are now representing one of the key reasons for the decrease in consumption. India has experienced unpredictable rainfall this year meaning that farmers were unable to determine when they should  apply fertilizer. They knew that if they applied the expensive fertilizer without rainfall in the following days , the fertilizer would be wasted and therefore the farmer would have made a big loss. This has resulted in a decline in fertilizer consumption as farmers are not willing to take this large financial risk as the price for fertilizer is so high they will not be able to afford the economic consequences if the fertilizer is not applied at the correct time.  This links into our classwork as this scenario shows an ideal example of the law of demand. The law of demand states that as a price of a product rises the demand for it will decrease. In the article the demand for fertilizer falls as the price for fertilizer rises. 

This article tells us that fertilizer is become less scarce in India as the demand for fertilizer decreased. This means that less products are being consumed and therefore their is a surplus of the good on the market. Because the price for fertilizer was so high farmers have decided to invest the money in other products which will benefit their crops. The consumers will wait for the price to decrease before they start consuming fertilizer again. Producers will now decrease production and will sell their product at lower prices. As the demand for fertilizer has increased firms are not making as much profit and therefore they will shift their resource allocation to more profitable products.

This article relates to the idea of demand because in the article it talks about the growing quantity demanded in the Coffee market. Since the Coffee market is expending so rapidly the price of the coffee is expected to increase rapidly. The larger the cofee market becomes the more the demand curve will shift, eventually the quantity demanded will decrease because the price does not seen worth it anymore for customers

Because the demand on coffee is increasing there is a threat that the product will have an increase of price soon because it will become very scarce. since the demand on the product is so high that the consumers have indicated that they want the coffee. Producers have an incentive to produce more coffee. If the producers are not able to keep the high amount of supply up than prices will rise and the supply line will shift to the left indicating that the price will increase and the scarcity has increased as well. Other markets may suffer as well from the increased of scarcity because the demand on complimentary goods will increase as well if the demand on coffee stays high.

Gold Demand falls (16. Aug 2012)

This article shows the fact that the demand for gold dropped. The global demand fell by 7 pc within three months up until the end of June. The World Gold Council stated that this is due to economies facing challenges as well as extremely high sales last year. The analysis also says that this is due to taxation on gold (mainly jewelry) in India. Luckily India is only one of many in the gold market, therefore It did not affect the demand too much. This relates to our discussion in class by addressing the fact of the demand curve moving to the left (the demand is decreasing). India's demand of gold may have dropped due to the new taxation has supply is limited.

Samsung underestimate demand for Galaxy SIII, losing a possible 2 million sales in a single month. A manufacturing glitch resulted in the slowing of production. Demand has increased substantially in the last two years, especially in the Asian market. Samsung used to only hold 10% of the market share, but they have now overtaken Apple completely. Samsung's success could be down to the price of their phones (substitution good), or the altering tastes of customers.

The demand curve for Samsung's Galaxy SIII would shift to the right, resulting in greater scarcity, and a required increase in supply. This did not occur in this situation. Customers were forced to ration their consumption, as some versions of the phone went out of stock completely. Price of the product would increase in most scenarios to further incentivise an increase in production, and a rationing of the good. If Samsung had kept up with their demand, they may have won some market share over other companies, but their quarterly incomes were predicted as far lower than what could have been achieved with adequate supply.

As the supply of diamonds keeps becoming scarcer, the demand for diamonds is increasing greatly. Global factors affecting the large demand for diamonds are increase in consumer wealth, better marketing tactics, western influence, and future value/prices. In India specifically where the population growth rate reached over 25 % - which has also led to the rise of a middle class - diamonds are now being seen as a "status symbol", or as a way to show off, the demand for diamonds is increasing quickly. China has as well due to strategically improved marketing tactics and western influences increased its use of diamond wedding rings up to 40 % of all women. As diamond prices are higher than a few years ago, diamonds can be seen as worthy to invest in because of their increasing value and finite supply. 

The world demand for diamond keeps increasing signaling that diamonds are becoming scarcer and scarcer. Producers will therefore increase the prices of diamonds as it is a limited source, producers will also however try to find more diamonds so that the resource isn't as limited. Depending on the consumer's income, demand for diamonds will decrease with higher prices. Consumers will also switch to an alternative market - an increase in demand for other stones, gems - as their behavior will change. Consumers will also ration diamonds and if purchasing it, purchase it in lower amounts.

The article discusses the idea that in the coming 20-40 years the demand for orange juice will almost double, and that the orange market, as well as the orange juice market must be prepared to supply enough products in order to satisfy the demand for orange juice. Although the citrus nurseries in Florida as well as South America are producing massive amounts of oranges in order to supply enough to orange juice firms, it is currently not enough to satisfy the growing population. It is estimated that global population will increase by 2 billion in the next 40 years, meaning the demand for orange juice will increase substantially. As a result of this huge increase in demand, which the American and South American markets alone cannot satisfy, various other markets worldwide, such as the Asian market, are hoping to move into the orange juice industry, in order to seize the opportunity and make more money by providing the product.

In the case of the orange juice, the equilibirum price and quantity will both be increasing, as there has been a sudden shift in demand due to demographics and a projected increase in global population. As a result, producers will see this increase in demand as an incentive to produce not only more orange juice, but also grow more oranges. Consumers on the other hand, will either look for substitute goods or ration the product as there has also been an increase in price, indicating the scarcity of the product. This shift will have a large impact on other markets as well. As the price for orange juice and oranges is increasing, consumers may look to consume apple juice or other fruit juices instead.

Analysis- Shampoo Demand Article This article about the demand for Shampoo is connected to the class topics due to showing parts of what we have learnt during our sessions in the classroom. The main key word which we have learnt in class that is shown in this article is demand, as the title states. It is a bit less connected to opportunity cost and resources than it is to demand and supply, which are both exploited in chapter 2. The chosen article speaks of demand of Shampoo, and how smaller packets are more wanted in the past few months or weeks. This relates to the supply part of economics, due to the producers and sellers no longer selling larger packets of shampoo, but sticking to the one time use ones. Therefore, this article reflects on the key ideas of what we have learnt in economics so far, because it relates directly to two of the key terms.

A new study by the Bill & Melinda Gates Foundation has found that chocolate is rising in demand in countries with new markets, such as China. However, due to global warming and a temperature rise of 2.3 degrees, the crops where cocoa is grown will halve by 2050. This will cause the entire demand curve for chocolate to shift to the right in the next 40 years. So far, an exact number for the price increase is unknown.  Price increases have occured in some places, such as West Africa, where the prices have gone up by 10 per cent.  Since cocoa needs a specific environment to grow (cool and moist), farmers can either decide whether to move their crops into the shade, which will have high costs, or to switch from growing cocoa  to another crop that CAN grow in the arid climate.  Some cocoa suppliers think that firms should focus on the quality and not the quantity of chocolate produced. This could have benefits, like better prices for farmers and less child labour. Not only is the chocolate market being affected by global warming, but also the French wine and Italian pasta market.  Non-price determinants such as the prices of related goods and expectations of future chocolate costs also play a large role in the chocolate market. If the demand for chocolate goes up in the next decades, the prices will also rise. Due to a change in prices more people will turn to chocolate-related goods like candy and pastries. Also, since a large price increase is expected to come, people will most likely buy as much chocolate as possible while it is still cheap. 

It can be deduced for this article that the scarcity for chocolate is increasing, just as the demand is. Due to shifts to the right in the demand curve, the price of chocolate has increased. Therefore, the demand curve will shift to the right and move up along the scarcity curve. Therefore, consumers will make sure to ration chocolate, as it has now become more expensive and less affordable. Other markets, like the candy market for example, that act as a substitute for chocolate will experience an increase in demand. On the other hand, markets like the chocolate chip cookie market, will experience a decrease in the supply curve, as chocolate is no longer as available as before. From the chocolate producers' perspective, they will increase the production of chocolate, as the prices are higher now and they can make more of a profit. Therefore, they will increase the allocation of resources towards the production of chocolate (like machinery, land for plantations, etc).

Verizon is expecting a surge in demand for smartphones like the iPhone in 2011, however how many Apple devices will sell is unknown because of uncertain quantity of supplies. The lack of supplies has really come to their attention in the last quarter of 2010 were they had a 2.6% decline in revenue. Even Apple claimed that they would've sold way more iPhones in the same period, had they had more supplies to meet the demand. The reason that Verizon predicted that this great surge in demand for the iPhone will come and are trying to gain more resources, is because only 26% of their customers own a smartphone, and they predict that 50% will be on a smartphone by the end of 2011. Verizon wants to be prepared for the launch of the iPhone. CFO Fran Shammo, stated that if Verizon is able to sell 11 million iPhones, that their revenue in 2011 could increase from  4% to 8%, and earnings from 5% to 8%, and these figures could double in 2012.

After having witnessed a loss in profits due being unable to meet the demands of consumers, Verizon is allocating more resources to the production of iPhones. On a PPC graph the demand line would increase showing that Verizon will have an increase in both the quantity of the supply and the increase in the price of iPhones. This is a signal of less scarcity in the market, and the incentives of both the consumer and the producer. Because of this increase in the supply of the iPhone, competition to Apple will have a decrease in potential consumers. A producer's incentives have become to produce more at a higher price. Since Verizon doesn't want to make the same mistake twice, they will allocate more resources to the production of iPhones so that they can maximize profits.

We see in the chart that in developing countries arms are considered a normal good. This is apparent as the number of sales is at its lowest in 2007, 2008, and 2009 - the time period of the late financial crisis. Incomes decreased and therefore also government expenditure. So since the governments had a reduced budget, they were forced to purchase fewer arms. However, once the global economy started to recover from the crisis, incomes rose again. Thus, governments were able to spend more on arms again (which we see in 2010 and 2011). This is a good example of how income, a non-price determinant of demand, can influence the demand on a good. Another non-price determinant of demand is government policy. The article states that Saudi Arabia was the developing world's biggest arms buyer in 2011, with deliveries of $2.8 billion - an unusually high number. Therefore, there must have been a change in Saudi Arabia's government policy; otherwise they would not suddenly be buying more arms. So now we see how government policy influences demand on arms. 

The demand of Fertilisers in India will drop by a fifth resulting in a demand of 45 million tonnes in 2012/ 2013 worth of fertilisers. One reason for this sharp decline in fertilisers is the cut in government subsidies to the industry which is creating a large fiscal distress for the state. Through the cuts in subsidies prices for fertilisers have increased and demand has been reduced. Another factor in the reduction of demand for fertilisers is the lack of rain meaning that investing in fertilisers is very risky for farmers in case it doesn't rain.

The demand on the curve would decrease, therefore the price would decrease and the scarcity would decrease because there would be more supply in comparison to the desires. Although there is a price decrease consumers would not raiton this good because it is mainly used by producers that need it, the farmers, who reduced their supply of food due to decreased subsidies and draught. Also, suppliers of the fertilisier would produce less because the profits gained from supplying fertilisers is reduced. Allocations to this resource would also decrease because suppliers produce less and might move their production to another good.

MUMBAI Aug 21 (Reuters) - Indian sugar futures fell nearly 2 percent on Tuesday on slow demand and additional supply of non-levy sugar, though a likely rise in demand next month because of religious festivals have limited the downside. Because of a few slow days in the sugar market, India's profit on sugar has decreased which means that sugar prices should drop in the coming days as the demand law states. Although a contributing factor, next month's festival, has limited the downside. With the demand decreased, there was a shift in the demand chart but because of future events which will occur, sugar prices will come back up in the coming days which means that the left shift which occurred these couple of days will pump back to the right because if this contributing factor. Because of this occasion the prices on sugar most likely will increase because of the higher demand of sugar during the Ganesh festival.

This is an article on the demand of sugar. As the International Sugar Organization has stated, that there is a deficit of 15 million tons in the production. It is stating: "Stocks are currently so low, says the ISO, that even next year's harvest is unlikely to restore reserves to a healthy level." This could make people nervous and push them to buying a big amount of the product now. Since the product might become scare in the future, the prices would rise and therefore people would buy a surplus of the product at the current price. The principal of  expectations of the future price would be touched.

Changes in equilibrium: Since the expectation of the future price principle is addressed, the demand curve shifts to the right. Therefore there is a higher demand for sugar, due to the fact that sugar is becoming more scarce. As a result of that, the producers have an incentive to produce more and raise the price, as they realize that the demand has increased. Consumers may then substitute or ration, as the price has increased and they might not be willing or able to buy sugar at this price. As a result of the points above, there would be more resources used to produce sugar even though it is becoming more scarce.

The demand for iPhones is greatly increasing in China. In Apple's fiscal year of 2011, they were able to sell 72 million iPhones, a number that soon might almost be sold in China alone. Currently, 10 million iPhones are sold in China, but this is because China's lead mobile carrier; China Mobile, has a network that is not compatible with the iPhone 4s. However, this year China Mobile is flipping to their knew network; the 4G which is compatible with the iPhone 5. This will open up a new market for Apple, as now, millions Chinese will be able to effectively use the iPhone 5 with China Mobile's network. Therefore, the demand for the iPhones will greatly increase due to the 'new' market.

Apple sold 72 million iPhones in 2011 to more than 100 countries. It is said that Apple will sell 57 million more iPhones per year in China since the demand is increasing. There are currently 650 million people who are branched to China Mobile which does not carry the iPhone network which includes 100 million who have found ways to use the iPhone through the network. Next year, China Mobile will change to the 4G network which will allow those additional 500 million people to get the iPhone.

This articles talks about the decrease in demand in the coffee production. A decrease in the price of a cup of Joe, shipping coffee took a hard hit with prices to move a crate of coffee has increased to 6.8% more. The global economy has dropped due to the worsening debt crisis in Europe, where thirteen countries are slowly collapsing. European countries are unable to afford coffee, which is why British drinkers had to cut back in the coffee consumption by 6.7% in 2011, while the demand fell in 2.6% in Spain and 1.6% in Italy. Brazilian coffee production have expanded field for production and increased the use of fertilizers in response to last year's high prices. The Brazilian farmers are holding off from selling the product due to that they are waiting for the prices to recover so that sell larger quantity of coffee.

The demand of coffee is decreasing due to that the import prices have increase to 6.8%. The coffee market has decreased because the prices of the good have increased. The overall demand for coffee has decreased because producers now face higher cost of production. Since the expense of coffee has increase consumer incentives decrease. Since the demand of coffee has decreased other markets like tea, energy drinks have increased because demand for substitute goods increased. Producers want to minimize production cost while maximizing profit.

The reason for why the Canadian government started to stockpile on maple syrup is because considering that the market for the maple syrup is very dependent on the weather and how much sap comes out of the maple trees they will stock pile and get more back- ups. The reason for this is that the Canadians are expanding their market into more regions having more than 70% of the maple syrup market and they are attempting to expand it so in order to keep the demand on maple syrup rising they will use their backups in case there isn't enough. They are making sure that there is always enough maple syrup for the market. They don't want to create a demand and then have a bad season leading to them not being able to supply. For example in 2008 when they started having failed harvests their supplies ran short which lead to the prices going up from 2.40 Canadian dollars to 4.00 which lead to several producers to be priced out of the market because of their inability to supply. Which is why they have reserve supplies of maple syrup so that they can always be able to supply the maple syrup market in case they have bad harvests one season.

The strategic maple syrup reserve signals that there is going to be less scarcity in the market for this product as they will always make sure that there is enough of this product being supplied. The producer to ration the maple syrup more, because if they supply too much of the maple syrup their reserve will start to decrease as they will not be making sure that some of it is directed towards the reserve. If the demand for the maple syrup would be very high they would allocate more of the maple syrup in their reserve stocks to the market however if they were to have a lowered demand they would allocate less of the maple syrup and keep it in their reserves.

Demand article as Oil demand falls in China

The article talks about future trends in demand and consumption of food in the future. The graphs portrayed in the article, show the estimated increase in food demanded over the next 10-15 years. This has to do with the fact that the population is continuing to grow significantly in the near future. The problem with this is that while more food is needed, many countries have little room for improvements. This will make them rely heavily on imports in the future as they are not able to feed their growing population. The biggest problem is that if the food production is not increased significantly over the next years, there might be a global shortage of food. 

The example of food is very relevant when talking about this topic. As the worlds population, the food becomes more scarce, the demand rises. This causees the price of food to increase. Usually, this would cause many people to allocate their resources towards the food production. Currently however, despite rising prices of food, it is still more profitable to produce something else. This causes the food production to be lacking of food, which causes the price to rise even more.

RIM, the Canadian company that developed and designed the Blackberry smartphone devices released from 1999 onwards, published revenues and profits below the analysts' estimates that were made earlier on this year. According to Bloomberg, RIM's share of global market decreased to a mere 8.2 percent in contrast to the 14 percent they obtained in the previous year. This decrease in global market share can be traced back to the skyrocketing iPhone shares, which simultaneously rose from 16 percent market share to 24 perfect. With so much of the consumer demand shifting towards iPhones and alternative smartphones, the consumer demand for Blackberries are decreasing, thus in turn lowering the annual revenue and profit of RIM. Another way this article relates back to the Economic concepts we discussed in class would be the market structure of cellular phones. Seeing as RIM's global market shares' decrease was so closely correlated to Apple's iPhones market share increase, we are looking at a low number of cellphone producers with large global market share percentages. We can also establish that they produce either similar or slightly differentiated goods, which concludes that the type of market structure being discussed in the article would be an oligopoly.