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1a. Change in demand for substitute goods. Change in taste.

Most likely to be elastic.

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1)mkt equilibrium price : p
mkt equilibrium qty : q
3) there is a surplus
4) there is a shortage
5) there will be a rise in price to decrease demand to bring the market back to equilibrium
ii)there will be a fall in price to increase demand to bring the mkt back to equilibrium

6) advantages:
easy to understand, doesnt require calculation, doesnt need as much effort as having real numbers
disadvantages:
not accurate, facts and figures can give a deeper undertanding, has real life application

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1. Market equilibrium price - p
Quantity - q

3. Supply is in excess and therefore its a disequilibrium.

4. Supply is less than demand.

5. There is high demand although the supply isn’t as much to fulfil the demand and so an increase in price would help this.
- There is high supply but not as much demand and hence its a surplus, so to work this out, the suppliers have to decrease the price.

6. It is easy to interpret and analyse but yet it wont give an accurate information and numbers to analyse.

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1) Market equilibrium price: P
quantity: Q
2) Area under P&Q
3) Surplus, since demand is less than supply.
4) Shortage, since demand is more than supply.
5)a- If there is excess demand, there will be a shortage, which result in a rise in price.
b- If there is excess supply, then will be a surplus in the market which result in a fall in price.
6) Advantage- symbols give a general idea about the price and quantity and are easy to interpret.
Disadvantages- Numbers give accurate information about the price and quantity

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1) Equilibrium price- P
Equilibrium quantity- Q
2) area under P&Q
3) There is excess supply. The market is in disequilibrium
4) The market is in disequilibrium due to excess demand
5) The demand is high but there is not enough supply to match it. Suppliers cannot match this demand at the given price. To correct this, prices will increase.
5)There is high supply but not enough demand. Consumers are not willing to buy these products at the given price. As a result, suppliers will have to lower their prices or reduce the amount of supply into the market.
6) It is easy to interpret and shows the general idea. However, it is not specific and you cannot get the exact numbers using this.

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1a)Market equilibrium price:P
Market equilibrium demand:Q
2)

3)QS exceeds QD AT PRICE P1

4)demand and supply in equlibrium

5)increase in price due to high demand and low supply

b)decrease in price due to surplus
because of excess supply

6)disadvantages include:Numbers give a better idea of how the markets are performing and how supply is responding in terms of price and gives producers a better idea on how much to produce,therefore without numbers it makes their job relatively easier
advantages include:symbols require lesser data to record and implement so initially even though the exact numbers arent there producers get a brief idea of how the market is performing and  make the necessary changes .

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1a. PES is lower because they take time grow and are perishable and also it depends on factors such as climate. Even if the demand for such products increases, they have to wait for it to grow whereas manufactured goods can be easily made & are usually man- made and can change according to the demand , hence primary commodities have an inelastic supply.

b. Because the production for such products cannot be increased or decreased immediately as it takes a long time to grow and are also perishable over a period of time.

2. The producers need to know because they can then change their method of producing the good and change accordingly.

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1)
Equilibrium price - P
Equilibrium quantity - Q

2)
It will be the area under PQ

3)
There may be a surplus in supply so to decrease the demand or to keep up with the demand the price was increased causing the quantity demanded to decrease.

4)
There may be a shortage as demand is more than supply.

5)
If the demand is in excess there would be a shortage causing the producers to eventually increase the prices.
If the supply is in excess  then there will be a surplus causing producers to decrease the price eventually.

6)
Advantages -
It is easier to understand and read.

Disadvantages -
It is very generalized and is not very accurate

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1) a)A large number of primary commodities are essential goods and a lot of them are perishable items like fruits and veg. These items cannot immediately respond to a change in demand or a change in price as they take a long time to produce. this makes primar commodiities have a relatively inelastic supply.

b) Due to the long amount of time that it takes to produce agricultural product, and the fact that they are highly dependant on uncontrollable aspects like weather, amt of rainfall, etc, makes it very very volatile as the PES is relatively inelastic

2) As shown in the table, the difference between PES in the short and long run is very significant. This is very important as this is the deciding factors for farmers and producers to decide what and how many of an agricultural product is to be produced. For example, a farmer might look at extending supply for cucumbers in the long run vs the short run as the PES is a lot higher in the long run.

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1a)PES of these products are low as they take time to grow because of fsctors such as preferred weather,climate conditions etc therefore reducing the quantity of supply and their responsiveness to price change whereas manafactured goods have high pes due to their volatility in terms of production and their production quantity can be altered with a rise/fall in their price

b)the reason its important to evaluate  short term pes and long term pes is so that producers can be more aware to price changes and market changes and respond efficiently to said rise/fall in prices and alter their supply on their evaluation of price change

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1a)
Primary goods are relatively easier to produce and requires less manpower to produce so the PES will be lower due to the demand being low causing the suppliers to keep the prices low. This will cause the PES to also be low. Now for manufactured goods t requires more labour and capital to produce it hence the  suppliers will be forced to keep the prices high. Also the demand for the manufactured goods will be more so consumers will be willing to pay more for it.

b)
As we have seen in the table the PES for primary and manufactured goods is very different so producers will have to choose between which good to produce according to a change in demand.

2)
It is very hard to produce long- term goods so it will have more value n the market whereas short - term goods are easier to produce so won't be that much n the market but will fetch you money faster. So when choosing which good to produce you need to keep in mind the future.

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1)a) PES of these primary commodities is relatively inelastic as they are naturally grown and take time to grow. They are also perishable and cant be stored for long amounts of time. Suppliers cannot change their crop mid-season and will have to complete growing the crop even if the demand of it decreases. The time taken to alter production is longer. Manufactures products can be stored easily and can be preserved. Supply of manufactured products can be altered comparatively easily in response to price changes. Manufactured goods are also more likely to have substitutes.

b) Agricultural prices are volatile as in the short run both supply and demand are relatively price inelastic. Changing production takes longer and can be uncertain because of the time taken to grow the crops.

2) So producers are more aware of the price changes and can respond by altering their production process appropriately.

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1)Market equilibrium price:P
Market equilibrium Demand: Q
2.  the area where rectangle p-e-q-0 forms shows the total expenditure by consumers.
3. at price P1 quantity supplied is exceeding quantity demanded
4.at price P0 the market forces of demand and supply are in equilibrium
5. If the market is in disequilibrium of excess demand, then there is a shortage in supply, resulting in an increase in the price of the product.
If the market is in disequilibrium of excess supply then the demand for the product decreases, resulting in a decrease the price of the product.
6. the advantage of using symbols instead of exact number is that one gets a general overview of the market conditions. but, the disadvantage is that one does not get and exact and accurate overview of the market conditions.

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1] a) Primary commodities are usually necessities, take time to produce and are perishable, hence they have a relatively low PES. For eg. if the demand for vegetables increases, farmers cannot immediately produce more more vegetables as they take time to grow.
b) Price of agricultural products are volatile over the short term, as suppliers take more time to respond to the price changes, as crops take time to grow.
2] It is important to distinguish between short-term and long-term PES, so that producers can be more responsive to the price changes.

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1a)Price of the substitute for eg tea
Change in consumer tastes and general trends

1b)I expect price of instant coffee to be relatively elastic as there are many close substitutes available.

c)yes,i would for the same reason involving substitutes

2a)the climatic conditions ans the inventories involving raw coffee are factors affecting supply of raw coffee

2b)the pes of raw coffee is relatively inleastic as it can only be grown during specific seasons and takes a long time to harvest.

2c)Pes of instant coffee would be relatively inelastic

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1)a) changes in taste
demand and price of substitutes
b) It would be relatively elastic as       there are substitutes available
c) yes as there are many substitutes and competition
2)a) weather conditions and the space or ability to store
b) the supply would be relatively inelastic in the short run as they are highly dependant on the crop and it also depends on the plant growth
c) it would be relatively inelastic

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Answer the questions associated with the given case

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Answer the questions associated with the given case

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1] a) Change in demand for a substitute (tea).
Change in taste.
b) Relatively elastic, as it has many substitutes.
c) Nestles instant coffee would also be relatively elastic, as there are many companies
that sell instant coffee.
2] a) Changes in weather.
Advancement in technology of machines used in its production.
b) PES of raw coffee will be inelastic as the supply can not change.
C) Instant coffee is made of raw coffee, hence it is relatively inelastic.

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1a)The quality of coffee produced and its substitutes (tea)

1b) I would expect it to be elastic

1c) I would expect Nestles instant coffee to be relatively inelastic (brand loyalty)

2a) Space to grow coffee (farmers in countries such as Kenya Colombia etc don't devote more than 2 hectors of land to coffee production)
another factor determining the supply of coffee, I the demand for coffee. if the demand for coffee is high, producers are likely to produce more.

2b) I would expect the price elasticity of supply for raw coffee to be inelastic. Raw coffee takes long to grow and so is the market conditions change the supply for coffee will not be so responsive.

2c) Instant coffee is made of raw coffee and so, it will follow the same trend as raw coffee. therefore, the supply for raw coffee too will be inelastic

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1)a)
- Demand for the substitute         good called Tea
-Change in taste

b)
- It would be relatively elastic as pleasure commodity and has many different substitutes.

c)
- Yes, I would expect the PED of Nestle's coffee to be also relatively elastic due to it having a close substitute called Tea.

2)a)
- The quality of the coffee they are producing.
- The weather and climate when they are growing their coffee plants

b)
- The PES of coffee would be relatively inelastic as only a certain amount of coffee plants can be grown at a time.

c)
- It would be relatively elastic as instant coffee is a more demanded product in comparison to raw coffee.

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1)a) Demand of Tea (substitute)
If the price of tea increases,                    demand for tea will fall and people may switch to coffee which is a substitute, ceteris paribus, and vice versa
Change in trends and tastes
Coffee might become more popular than tea and it may cause a rise in demand for it.

b) I would expect the PED of instant coffee to be relatively elastic as instant coffee has a direct substitute i.e. regular coffee grounds and coffee itself has a significant substitute (tea)

c) I expect Nestle instant coffee to be slightly more elastic than instant coffee as the instant coffee brands have many substitiutes

2)a)i)  Quality and Quantity of the harvest
If the harvest for a particular year is poor, and the amount of coffee harvested is low, the price of coffee will go up as the supply curve shifts inwards to the left
ii) Technological advancement in roasteries/ instant coffee factories
If roasteries/instant coffee factories adopt newer technology that helps turn green coffee into finished goods for consumers in a quicker and more efficient manner, the supple curve will shift outwards to the right

b) I would expect it to be relatively inelastic as coffee is a perishable good that is highly dependent on uncontrollabe factors like weather

c) Due to the high number of people dependent on instant coffee in their daily lives, i would expect the supply of coffee to be inelastic

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1a) Most primary commodities (eg fruits and vegetables) are necessities. Most of these goods are perishable and  cannot immediately alter to market demand (eg a decrease In demand for vegetables and an increase in demand for fruits does not mean that farmers can immediately start producing fruits and stop the production of vegetables) Besides this, most primary goods may not have substitutes and so may have a relatively low PES.
On the other hand, most  manufactured goods aren't perishable and are more responsive to market changes. Besides this, advancement in technology with respect to efficient production and the availability of substitutes leads to manufactured goods having a higher PES.

1b) Agricultural good prices are volatile over the short run because producers (farmers) cannot change the quantity supplied immediately and so the PES of agricultural products in the short run is also inelastic.

2) It is important to make a distinction between short-run and long-run price elasticises of supply so that producers can be more responsive to market changes. For example; the PES for green peas is 0.31 in the short run (inelastic) and 4.40 in the long run (elastic). this will tell producers that in the short run, 1%change in price will cause only a 0.30%change in supply but, in the long run a 1% change in supply will cause a 4.40% change in supply. Since the PES is high, it will help firms undertake actions that improve their ability to respond quickly to market changes.