Demand and supply for eggs

Topics: Supply and demand, Consumer theory, Price elasticity of demand Pages: 4 (1150 words) Published: April 1, 2014
Contents

1. Introduction

Demand and supply is one of the most essential fundamental concepts of economics and it controls the behavior of market economy. Purpose of assignment is to study the reasons for increase in price of egg over the period. Egg price at markets may be affected by many factors related to demand and supply. Article says that the main cause for the price increase attributed to increases in price of inputs, especially in feed prices.

In order to elaborate the topic, economic models/concepts such as price elasticity of demand, income elasticity of demand and cross elasticity of demand are being used. These models will give a clear explanation about how the demand has changed in different situations. However, it is required to study all factors those are affecting to demand and supply in order to obtain a clear understanding about the market.

2. How the prices of egg get increase in the market?
According to prices listed on the National Egg Coordination Committee (NECC) website, the wholesale rates of eggs have gone up by nearly 47% in the last five years. Egg prices could increase either due to increase in demand for eggs or decrease in supply of eggs. Following graphs will further explain effects on the price due to changes in demand and supply.

As shown in figure 1 increase in demand from D-D1 leads to increase in the quantity and as well as the price and in figure 2 it shows decrease in supply from S-S1 leads to decrease the quantity and increase the prices of eggs. 3. Supply factors

Supply means the quantity of a product that a producer is willing and able to supply onto the market at a given price in a given period of time. According to the content of the article egg farmers find it difficult to supply their products at a lower price due to various reasons. Major reason for increase in price of egg is increasing price of feed. “The feed for hens mainly consists of maize, soya, sunflower, maize bran, fishmeal....
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