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I am interested in how the economy of a country works - the price changes of a fish market.

Extracts from this document...

Introduction

Introduction I am investigating this report because I am interested in how the economy of a country works. Even though I only investigated the price changes at the fish market, it was enough to get a fair representation of how things work in this country, particularly about economics because each country has different government which therefore have different ways of determining what to produce for whom to produce and how to produce. For example, in China the government decides what, how and who to produce as the country practices planned economic system, while the U.S government let the people or the market force make the decisions mentioned before. Economists would observe the economy of a country. The various observations will make them better at understanding the cause and effect of the market forces. In the Netherlands, the selling of drugs is made illegal by the government with demands from the market. Economists in the country will try to predict what are the impacts on the selling of drugs, whether it is worth or not. If the selling of drugs will cause an increase in social problems or a decrease in the welfare of society, than they could suggest to the government to prevent the selling through legal ways. Demand Consumer's demand plays a large role in determining how scarce resources are used in the economy of a country. The demand is determined by the want or desire for a good or service backed up by the willingness an ability to pay for it. The amount of a commodity consumers are willing and able to buy is known as quantity demanded. Law of demand- the higher the price, the lower the quantity demanded and vice versa. This can be shown in this diagram can be shown on this diagram. The Market Demand Curve. P1 As price falls P2 D Q1 Q2 Quantity demand Extends This graph shows that as price falls from P1 to P2, the quantity demanded extends from Q1 to Q2. ...read more.

Middle

This applies specifically to banana because bananas were transported by small lorries instead of using a big one. So, when any of the costs of production increased it affected the cost of banana. Retailers kept increasing the price of banana because they wanted to make fast profit. However, once the price was getting 'overboard', consumers started to consume consumed fewer bananas. This means that there was an excess supply and a contraction of demand (see graph #2). Graph # 1 P D S1 S P1 P Q1 Q Q Graph # 2 P D S P1 Excess supply Price falls P equilibrium price 0 New quantity traded Q II. The prices for orange went down because the demand for this item was low for a certain period of time due to change in taste from these fruits to more locals' fruit such as banana and star fruit (price for star fruit was not recorded). However, the price increased to the original price once the prices for banana and star fruit had increased. It was also because due to the holiday season where most Bruneians went to Limbang to buy groceries, including fruits. P D S D1 P P1 0 Q1 Q III. The price for mango went down a little bit because there was an increase in supply due to the start of the season. Therefore, retailers bought a large amount of mango from Thailand and India because it was cheaper than before because producers in those countries were producing more at each and every price than before. This means that the supply curve had shifted outwards. So, the price of a unit of mango was cheaper at each and every price as shown below. P D S S1 P P1 Q Q1 Q IV. During holiday seasons, most Bruneians went to Limbang (a town near by in Malaysia). Here, the fruits are cheaper. ...read more.

Conclusion

$ 7.00 $ 6.00 $ 7.00 $ 6.00 Price index 100 100 100 117 100 117 100 Conclusion The factors that I have found to cause prices to change were a bit different from the ones I mentioned in the 'Introduction'. They are: Vegetables Supply; i. Changes in the costs of production - rise in petroleum and pesticides Demand i. Changes in tastes - consumers ate more locals' fruit than imported fruit. Others; retailers having clearance sale, important ingredient (mustard leaf) and the introduction of new product (broccoli) Fruit Supply i. Changes in the costs of production - rise in petroleum Retailers just wanted to increase the prices of fruit to make excessive profit. Others; retailers having clearance sale. Seafood Supply i. Technical progress- the use of Global Positioning System ii. Freshness of goods iii. Illegal fishing activity by foreign fishermen iv. Changes in the costs of production- rise in petroleum. Demand i. Changes in the price of other goods- rise in chicken and meat. The reasons mentioned above are a bit different from the ones mentioned in the Introduction even though some factors affect demand and supply are quite the same for every category (seafood, vegetables and fruit). However, some are more relevant to particular goods than other e.g. illegal fishing, important ingredient (mustard leaf). The factors mentioned for vegetables and fruits are different from the ones mentioned in the introduction. It means that the economics rule does not necessarily apply in every aspect of the market. Here, the retailers are freer to determine the prices of their products. This is because there is no government and non-government organization that deals with this problem. So there is no one to protect the consumers' rights. There are a lot of problems that I face in completing this coursework. The retailers were reluctant to help us maybe they thought that we were some nuisance try to interfere with their everyday business. Also, there are no written documents about how does the market in Brunei works. ...read more.

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