Tag Archives: Mahnpreet

Supply and Demand Assignment

Here is my article: Vanilla Valuation

Vanilla is an important ingredient that is needed for many baked goods. Many companies need this to produce the good they would like. Most of these companies got their supply of Vanilla from Madagascar which harvests an immense amount of it.  In 2017, Cyclone Enawo hit Madagascar, causing the supply of vanilla to drop drastically. About 30% of the crop had been destroyed and their expected harvest had been reduced. Due to this the market for vanilla has seen a huge price increase.

Companies such as Nestle who use vanilla in their chocolate have had to increase their prices because of the shortage of vanilla. The supply determinant seen here is the cost of factors of production. This is because the cost to produce these chocolate bars has increased drastically.vanilla-graph.jpg