Sanjae’s Supply And Demand Assignment

Source: http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/vegetable-prices-flare-up-with-mercury-rising/article17549068.ece

Market: Cabbage

Vegetable prices are going up as summer approaches India. Cabbage prices before summer was around Rs.300 to Rs.350 but now it costs almost Rs.500. This rise in price of cabbages happened for a number of reasons. Due to extreme summer in India, there is a shortage of water supply which lowered the total yield of the farmer’s harvest. Pest attacks also increased during the summer which destroyed a lot of their crops and resulted in low level of production. The cost of fuel and transportation also seemed to have increased, making it more expensive for the suppliers to transport the goods around.

In this case, the supply determinant is the Cost of Factors of Production. The quantity of cabbages that the suppliers can produce and supply went down as the cost of factors needed for production went up . As a result, the supply curve shifted to the left. So now the suppliers are selling lower quantity of cabbages for a higher price supply-and-demand-graphas seen in the graph.

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