- April 29, 2020
Demand and Supply
Demandand supply have an extremely close connection to the prices of anygoods. Typically, when the prices of a product raise, its demandwould decrease and vice versa. The same case applies to the reducedsupplies where the prices tend to increase. The events described inthis article are related to the shortage of avocados that made itscost increase, and this has a close relationship with the demand andsupply in any economy (Daniels, 2016). It is important to explore andexplain why the shortages in the supplies of avocados led to thesoaring charges using the law of demand and supplies.
Relationshipbetween the Article and the Subject of Study
Supplyis defined as the quantity of a good or service that the producingcompanies can put to the market at the prevailing prices as at aparticular moment. Similarly, demand is the amount of a good orservice that a consumer is willing and able to buy at a given charge(Hubbard and O`Brien, 2014). In the case at hand, there is a very lowendow of avocados from the primary producer who is Mexico. There wasa growers strike in Mexico that affected the production of theproduct to be made available to the main consumers like the UnitedStates among others. With the demonstrations, it meant that avocadocould not be grown or harvested and none of it was available to bedistributed until the issue could be solved. California has beensubstantial in the crop, but it was affected by the drought andMexico remained the only source. The dispense was minimal, or none ofit existed to cater for the needs of the massive users. In short,there was a shortage in the market (Daniels, 2016). The retailers hadto look for any other means to get the fruits for use especially inthe restaurants that utilized it to make guacamole that is consumedtogether with chips. The fees doubled while in other areas it tripledmaking the facilities to abolish the item from their menu becausethey could no longer afford to buy the crucial ingredient. Theconsequence was that the levies had to shoot as the demand was stillhigh and none was available to be sold.
Onthe other hand, demand was also affected in one way. It was very highat soaring prices, but the supply was extremely low to satisfy theunique users. From the case study, the largest consumers are therestaurants who use it to make guacamole which adds value to thehealth-conscious of the customers. However, from the view of mostindividuals, the current trend is likely to change as the issues thatinterrupted the harvesting were solved, and an amicable solution wasfound in Michoacan State. According to Alan Arzoian, the food chainis likely to get filled after a few weeks. Similarly, APEAM predictedthat 40 million pounds of avocados would be transported to the US assoon as possible (Daniels, 2016). This is an indication that theallocation will increase to respond to the higher demands, but oncethey flood the market, the prices will drastically fall althoughthere are consumers to use it.
Thisassignment has extensively explained why minimal supplies can lead tohigh prices of any good. It can be seen that the demand and provisionof products, in this case, avocados, have a relationship to theprices charged. When the demand is high, the prices are low, and thereverse is true. As well, under high supplies, the costs are low andvice versa. The solution is to have more producers so that demand andsupply can be kept at equilibrium.
Daniels,J. (2016). Kissyour guacamole bye bye: Short supplies of avocado send pricessoaring.Retrieved fromhttp://www.cnbc.com/2016/10/24/kiss-your-guacamole-bye-bye-short-supplies-of-avocado-send-prices-soaring.html.Hubbard,G.R and O`Brien", A.P. (2014). Macroeconomics,5th ed. Person.