Demand And Supply Analysis Course Work

Published: 2021-06-21 23:48:06
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Courtesy, scorching heat and poor weather conditions, US Economy is expected to experience worst drought in half century which is likely to affect prices of food crops.

As declared by the federal government, since drought is affecting 88% of corn crop, it is likely that supply of corn in the market will be low and a shortage will be experienced. On account of low supply in the market and with inelastic demand for corn in market, the prices of corn will rise from its original level and with lower equilibrium quantity, the new equilibrium will be set at the point above the initial equilibrium.

Figure 1:The above diagram shows the effect of shortage of corn supply in the market.

Now with corn being staple for processed foods and animal feed, shortage of supply of corn in the market is likely to affect prices of milk, beef, chicken and pork.
With corn being used as animal feed, low availability of the food crop(corn) will end up in low supply of beef, chicken and pork and with inelastic demand of animal food, the prices will shoot up with low equilibrium quantity fixed.Similarly, since corn is used for the processing of milk, shortage of supply of corn in the market will lead to decrease in supply and ultimately rise in equilibrium price of milk and low equilibrium quantity.

On account of increased consumption of Sushi in US Market, Sushi Bars are opening in vast numbers which was helpful in increasing the quantity supplied in relation to the increase in quantity demanded. However, despite the continued demand of sushi, the prices of sushi has remained constant. This is because of simultaneous proportionate change in supply and demand.
Since the change in quantity demanded of sushi was matched with proportionate change in quantity supplied, the market forces were able to maintain constant price of sushi.

Figure 2: The above diagram shows as how the price of sushi were constant despite continue increase in quantity demanded.

Works Cited

Parkin, Micahel. "Markets in Action." Institute, CFA. Economics. Boston: Custom, 2011. 71-84.
Parkin, Michael. "Elasticity." Institute, CFA. Economics. Boston: Custom, 2011. 7-31.

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