Economics Micro Commentary

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Economic Commentary
About: Demand, Supply and Price Control
Source of the article: Internet (business-standard.com)
Name: Sang Hyun Jeon Section and Grade: 11 C

Mentha oil rises on industrial demand
Press Trust of India / New Delhi November 04, 2011, 12:04 IST Mentha oil prices rose by Rs 9.40 to Rs 1,354.90 per kg in futures trade today, as traders enlarged their holdings tracking a rise in the industrial demand in spot markets. Restricted supply from the growing belts of Chandausi, in Uttar Pradesh also supported the prices. At the Multi Commodity Exchange, November mentha oil rose by Rs 9.40, or 0.70%, to Rs 1,354.90 per kg, clocking a business volume of 963 lots.

The December contract traded higher by Rs 8.80, or 0.65%, to Rs 1,348.30 per kg, with a trading volume of 209 lots, while January delivery prices rose by Rs 4.20, or 0.31%, to Rs 1,341.70 per kg, with a trade turnover of 13 lots.

Analysts said fresh buying by traders following pick-up in spot demand and lower arrivals from Chandausi in Uttar Pradesh mainly pushed up mentha oil prices at futures trade.

Increasing demand from pharmaceutical Industries also kept mentha oil prices higher in the futures market, they said. Government brought down the price of mentha oil by setting the maximum price of 1348.20 per kg.

Commentary:
Introduction of theory and Connection to this article::
Most goods have substitute and complementary goods. However, there are certain goods, which don’t have substitutes. This is determined by the demand, supply and price control of this good. In this article, the price of mentha oil has increased (mainly because of its high demand) but due to its lack of substitute goods, consumers are forced to buy them. Recently, the price of mentha oil has increased. I am going to analyze what is going on. Defining Terms:

Demand: It is a quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period. Supply: It is...
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