Analysis of Article - Economic Concept

Topics: Supply and demand, Economic equilibrium, Austrian School Pages: 1 (408 words) Published: June 3, 2013
Article 1
Topic : Applications of Demand and Supply Concept
Article:Inflation Pours Cold Water on India's Mango Fever
Analysis
The news article reported on the inflation that occurred on the cost of production, which resulted in the increase of the selling prices of Alphonso mangoes in India. Alphonso mango also known as the King of fruits in India and it starts to bear fruits generally from March till the end of June. During the festive celebration, Indians do not only consume these mangoes for each of their meals but also make them into juice and use them in a variety of dishes in the mango parties. It is estimated that US$100 million worth of Alphonsos are often sold in Mumbai merely every year. This is a strong injection to the India’s economy. However, the price of the Alphonso mangoes have steeply increased due to inflation. The prices of the mangoes have risen from US$10 per dozen to a range of US$13 to US$15 per dozen. The concept of demand and supply is relevant to the analysis. There are a few of determinants which cause the changes to the supply. According to the article, we found that the cost of production had contributed to the change of the supply. It was further explained by the fruit exporter Mr. Sanjay Pansare that the prices of pesticides and fertilizers had been raised doubled and a gradual raise in labour cost as well. Other than these headline inflation, the recent increased in diesel prices had seriously caused the transportation costs to increase all of a sudden. Since the cost of production of the Alphonso mangoes had increased, it had also decreased the profits of firms and followed by the reduction in the production of mangoes. Therefore, the supply of Alphonso mangoes would be decreased as a result of it. It is important to emphasis on the concept of market equilibrium. Market equilibrium is when the supply of an item is equal to its demand. Once the equilibrium price and equilibrium quantity achieved, there will be no excess...
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