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Homework answers / question archive / For an organic agriculture firm, you work as a business analyst
For an organic agriculture firm, you work as a business analyst. In February, you found that There was an unforeseen temporary rise in rice demand in 2019, increasing monthly demand for rices.25 percent for lentils at any possible price. As a consequence, the price of rices grew by TL5 per kilogram, By February's end. This demand increase ended in April 2019, and rice prices dropped back to their average. Only before the surge in temporary demand occurred.A steady rise in rice demand occurred later that year in August 2019, raising the demand for rices.Monthly demand for rices at any possible price by 25 percent per month. Price of rices by May 2020 By TL1 per kilo had increased. The industry witnessed a change in demand of almost the same size in both circumstances. Nonetheless, the It seems that the change in the equilibrium price was different. Explain why there were such distinct price responses market in the business.
In the first case, the demand surge was unforseen and temporary because of which supply was unable to cope up with the demand. This created a huge mismatch between the supply and demand, which increased the prices significantly by TL 5 per kilogram.
In the second scenario, the increase in demand was steady and spread out over many months. The producers were able to foresee this and therefore increased their supply appropriately, as they had time to do it. This ensured that the demand supply gap was not very large, which led to only a smaller increase in the prices ( only by TL 1 per kilogram ).
