Part One: Various Forces
The demand factors of the chocolate in the world mainly arise from Britain, although after 2000 the sales in Britain were much lower. The demand determinants arise from the change of consumers’ behaviour. The consumers in Britain seemed to take care about their health and reduced the consumption of the chocolate which drove the demand down, although demand was higher in the luxury chocolate because of the fondness for luxury. The cocoa and chocolate are complementary goods, so there is an inverse relationship between the price of cocoa and the demand for chocolate. In 2011, the political crisis occurred in Ivory Coast which led to the rise of the price of cocoa caused the demand of the chocolate goes down. Supply Factors
The supply factors in the three articles are the fair-trade. In 2002, the fair-trade price of chocolate was $1750 per ton which was higher than the equilibrium price. The higher of the price made more farmers be willing to produce cocoa and therefore increased the price of the cocoa. However, a portion of the $1600 per ton was paid to the middlemen who was a must for the export, which would reduce the money received by the producer. This may lower the supplied quantities a little bit. In 2011, political crisis and the export ban happened in the Ivory Coast drove the supply of the cocoa down which on the other hand raised the price of the cocoa to $3700 a metric ton, a 34-year high. Furthermore, the rainy season increased the chance of spoiling for the cocoa beans which trapped in the warehouse. This increase the loss. The increase of the cocoa smuggling from Ivory Coast added the average variable cost to the cocoa which therefore drove its price up. Since the quantity supplied was much smaller than the quantity demanded, the shortage occurred in 2011.
Part Two: Forms of Market Structure
The three chocolate producers Nestle,...