Demand and Supply Analysis for Mars Bar

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Demand and Supply Analysis for Mars Bar

Section 1

a.        There’s a worldwide shortage of sugar due to unfavorable weather conditions in the major growing regions.

A shortage in the production of sugar will determine the amount of the Mars bar produced. This is because the unfavorable whether conditions are affecting the production of sugar. The supply of Mars bar depends on the price of the factors of production which in this case are affected by the bad weather. Weather conditions are part of the factor of the production of the Mars Bar because without proper land for the production of sugar, which is an important ingredient to produce it, the supply of the Mars bar will also be affected. For being limited, due to the weather, the price of sugar will consequently increase.

Weather Condition       P (sugar)   

As a result of the rise on the price of the factor of production (sugar) as an ingredient to produce the Mars bar, the Supply for the main product will fall.

P (sugar)        S (Mars Bar)

With the aid of a graph, the rise on the price of sugar produced a shift on the quantity supply of Mars bar is shown below:

By shifting to the left, away from the equilibrium point (Qe) it represents that there was a decrease on the supply (S1 to S2). If the supply goes down, it will also affect the price of Mars Bars (P1) which goes up, becoming P2, as demonstrated on the graph.

S( Mars bar)         P (Mars bar)  

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b.        The Manufactures Worker Union successfully negotiate an across the board

wage rise for workers based at all Mars Confectionery plants.

The pay rise granted to the workers at all Mars Bars confectionery will substantially influence on the supply of the product. In this case, the increase of the workers salary will decrease the supply of Mars bar due to the fact that the company could have been investing on the production instead. Thus:

P (labour)       S( Mars bar) 

The graph below illustrates a ...

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