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

Economics Commentary- Prices of onions jumped yesterday, buoyed by a ban by India on the export of the item

Extracts from this document...

Introduction

Onion prices rise on Indian ban Staff Correspondent Prices of onions jumped yesterday, buoyed by a ban by India on the export of the item, traders said. The price of onions rose to Tk 36-45 a kilogram yesterday from Tk 32-42 on Thursday in markets in Dhaka, according to Trading Corporation of Bangladesh. The wholesale prices of onions also rose. ?There is a lack in the supply of onions in the market. Those who are still hoarding stocks are reluctant to sell as well,? said Idris Ahmed, owner of a wholesale store, Dhaka Baniyalaya at Shyambazar. He said onions were selling at Tk 35-36 a kilogram at the wholesale market of Shyambazar yesterday. Prices went up since Friday afternoon, after news of the ban by India, said Ahmed. The prices of locally produced onions also rose, influenced by the move by India, he added. This is the second time in less than a year that India restricted onion exports to curb the hike in prices, according to Indian news reports. ...read more.

Middle

resulting in price rise. Price of onion in the market is determined by the demand (the amount of a commodity that consumers are willing and able to buy at different prices) for and the supply of onions. Initially the market was equilibrium (this is the point where demand is equal to supply) at point E where at P* price Q* amount was purchased and sold. Due to the ban imposed by the Indian government on exports of onions, the supply of onions in the Bangladesh market has decreased substantially. This is because Bangladesh relies on imports of onions from neighboring countries for the supply in its domestic market D S1 S S1 S D Q1 Q Quantity of Onions The decrease in supply will shift the supply curve to the left from S to S1. This will result in a new equilibrium E1 with a higher equilibrium price. As the article says that the ?price of onion rose to Tk 36-45 a kilogram from Tk 32-42 The higher onion prices will reduce the quantity demanded and people with limited income or low income will have to switch to the available substitutes (goods which satisfy the same wants) ...read more.

Conclusion

However this is only a short run solution (time period during which at least one factor of production cannot be changed) solution to deal with the immediate prices. Imports will increase supply and thereby reduced price of this commodity and benefit the Bangladeshi households. To deal with this problem in the long run (time period where all factors become variable) the Bangladeshi government should encourage greater domestic production of onion. This can be done by giving subsidy?s to onion producers or spreading awareness to popularise onion production. The government should also try and reduce onion hoarding by traders in Bangladesh market. Hoarding is an illegal activity and the government should be vigilant to stop this. The government also need to improve infrastructure facilities like irrigation, transportation and storage facilities to reduce the fluctuation in the supply of agricultural goods. The government can also build a buffer stock (a stock of essential food grain and strategic materials held by government to deal with unforced seen events) of essential food grains to reduce the fluctuations in the prices of agricultural products like onions. However all this involves a lot of government expenditure which may result in higher government borrowing and greater taxes. ...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. IB Economics Article Commentary. Effects of the Ban of Plastic bags in California.

    This situation can be represented in Production Possibility Curve. The vertical axis is the price, and the horizontal axis is the quantity of plastic bags. California is trying to ban plastic bags. This creates another equilibrium shifting the market equilibrium left, moving e* to e^m black market. Banning causes huge social loss as shown on the graph.

  2. The Economics of Housing. Factors affecting prices and demand.

    So the change of house prices trend was still upwards in 2006. Year 2007: From the graph figure we see that, there is an increase in house price in all the year 2007. The average price of house in jannuary-2007 was �174,612 in all UK and �316,428 in greater London.

  1. Commentary on Indian News Article "Food prices push inflation to 6.95%"

    an impact on the whole economy, as food is a necessity for everyone. In theory, there are two macroeconomic policies designed to decrease and influence the inflation rate. The inflation rate, mentioned in the article in India is at 6.95%.

  2. Growth and Development Problem Set - IB Economics exam questions and answers.

    Use production possibility curve diagrams to explain the differences between actual output and potential output and between economic growth and economic development. Production possibilities curve (PPC) represents all combinations of the maximum amounts of two goods that can be produced by an economy, given its resources and technology, when there is full employment of resources and productive efficiency.

  1. Economics Commentary on Foreign Capital Shuns India

    Certainly there are existing internal problems such as 'corruption' and 'sluggish bureaucracy', which are evidently not what foreign companies like Posco are looking for. The qualities that intrigue multinational corporations to invest in India are the economic prospects of India, which offer them possibilities to maximize their profits in the

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

    that the world shall readily come to Asia, especially to India where the democratic conditions in addition to manufacturing superiority and effective administration make it a suitable destination to invest money. C:\Users\Elcot\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Word\220px-Hilbert_ICT4D_cube.jpg Cloud Computing : India and China are the two major competents in cloud computing.

  1. The Benefits of Microcredit to Bangladesh

    Particulars June 2009 (489 NGO - MFIs) 1 Number of Branches 18,022 2 Employer Involved 1,12,487 3 Number of Clients (million) 24.77 4 Number of Borrowers (million) 19.50 5 Total Outstanding (in million taka) 1,21,881.85 The Microcredit Regulatory Authority (MRA), established by the government in August 2006, received applications from more than 5000 private institutions (NGO-MFIs).

  2. Economic Commentary: Price Floor - A ban on the sale of alcohol below a ...

    demanded from Qe to Qd, therefore resulting in a surplus (when quantity supplied increases quantity demanded) of alcohol at the price of PF. Due to a price floor on alcohol, stakeholders in the market will be affected. Low income consumers will demand less alcohol as they will no longer be able to afford the good at the set price.

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