• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

economics commentary

Extracts from this document...


ARTICLE Rice, pulses may cost 20% more this festive season 10 Oct, 2007, 0000 hrs IST, AGENCIES NEW DELHI: This festival season may drain your pocket a little extra as the prices of pulses and rice are likely to shoot up by 10-20%, an industry report has said. The retail price of pulses may jump 15-20% to Rs 45-55 per kg in the next few days from Rs 35-45 per kg now, said a report by industy body Assocham. Releasing the report 'Pulses and rice prices during festival season', Assocham president Venugopal N Dhoot said that the country faced a shortage of one million tonne of pulses in the past few weeks and this is likely to widen further. "The price of rice might go up 10-15% in view of exports of non-basmati rice to African and other nations. A ban should be imposed on exports to meet the festival demand," the report said. "The price rise due to supply fall will only add to the woes of consumers who have already squeezed their budget due to rising onion and vegetable prices," he said, adding ...read more.


The quantity supplied is much less than the quantity demanded thus creating the price to rise by 15% - 20%. (Fig i) The market clears only when the quantity supplied is equal to quantity demanded. This situation is called equilibrium (as seen in fig i). The illustrated figure shows that initially at "Po" price the producers were willing to supply quantity "Q" of rice and pulses. Now due to erratic production of pulses and rice across the globe, a supply deficient has been created. At the same time the quantity demanded for pulses and rice has increased tremendously leading to a gap between the quantity demanded and quantity supplied thus leading to a hike in prices (fig ii). (Fig ii) As there is a decrease in the supply of pulses and rice, the supply curve shifts to the left from S to S'. This causes the quantity supplied to reduce from Qx to Q'and the price to increase from Po to P' which is above the equilibrium. ...read more.


This might discourage them to purchase the same amount for a higher price that they did earlier for a lesser price. There is a possibility of consumers decreasing their consumption of rice and pulses marginally. Producers: The producers of pulses and rice would earn abnormal (greater) profits because of the rise in price but gradually in the long run because of various measures taken by the government, they would again start earning normal profits. Government: Immediate measures would have to be taken to stop the prices to rise further. The government would have to tackle this situation taking into consideration both the producers as well as the consumers. Other countries: US, Canada, Myanmar and Pakistan would also be affected by this price rise and deficient supply. They might consider this as an opportunity and might increase the prices of rice and pulses imported to India marginally. If this happens then Indian market of pulses and rice would get affected. The only advantage of this situation would be that this would act as a warning for the future thus awaking the Indian Government to take precautions for any such situations that might occur in the future. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Economics Coursework - Demand&Supply

    But green groups counselled against such a "knee jerk" response and said the money could be better used to fund sustainable transport solutions. Some environmental organisations fear funds could be diverted from existing pots of money set aside by the government for investment in green technologies, such as the �400m

  2. The future of Eli Lilly

    companies focusing on copying existing pharmaceutical products, the Ranbaxy type of company was rare. The advantages for the Eli Lilly were that they got a partner with a thorough knowledge of the local market; We felt that we could use Ranbaxy's knowledge of the market to get our feet on the ground in India.

  1. Markets and Price Determination

    bread and butter, car and petrol). Supply Supply = a producer supplies a good if he is willing and able to offer the good for sale in the market at the price being charged. Factors affecting the supply of a product 1. The price of the good Law of supply = 'all other things being equal,

  2. Role of ICT for "Make in India" government initiative.

    It has transformed defence industry in a tremendous way. ?Even a dumb bomb produced can be transformed in to Smart weapons with the aid of ICT nowadays? One of the ambitious project for Indian Defence sector is the ?Make in India? initiative.

  1. 15 Historical Economic Questions on Mercatilism and the Development of European Countries.

    This change allowed factories and firms to be located anywhere in the mainland and essentially created much more land for productive services. This change also allowed firms to locate themselves within areas of high population density, abundant natural resources and high volume commerce that increases efficiency of trade immensely.

  2. IB economics commentary - Demand and Supply

    He went on to say that farmers themselves have not benefited from price hikes, but rather that it is the middlemen who purchase harvests from farmers and wholesalers who end up making large profits in such situations. Further, Hegazi said the government should reconsider its policy towards the agricultural sector.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work