Econimics

Assignment Brief/Scenario

“Use the internet and various literature resources to analyse the price behaviour of a product in a country”.

The process begins with a sound understanding of the factors affecting the demand and supply of the product

The factors analyzed during this exercise should help students predict likely price trends in future.

Task One

Choose a Product or Service which you would like to consider for the purpose of this Assignment. Preferably, this should be a Product/Service for the company you are working for, OR the company where a close relative or friend is working so that you can access data and information easily.

It is essential that you keep in mind that you will need a lot of information on the Product/Service to enable you to do full justice to this assignment, while making your selection of the Product. Your personal knowledge of the Product should be enhanced through literature and web research, so that you are very familiar with the Product/Service and competent enough to understand the market dynamics. Write a note on the Attributes and functional aspects of the product, where and by whom it is used, and the criteria used by you for selecting it for this Assignment

Task Two

Collect data about the price trends of the product in the last three years. Identify the demand shifters and supply shifters. Present the data in the form of a chart and write a note explaining the role of the demand shifters and supply shifters at particular points in the period.

Task Three

What is the likely price trend of this product in next one year.

Task One :

The criteria for selecting rice have been the current situation globally. Inflation, scarcity of food and petrol prices has encouraged me to opt for RICE.

Brief note on Rice :

Rice is staple diet for a major part of population around the globe. It is consumed in many countries as the main food. Countries like Japan, China, Thailand, Vietnam, Indonesia, India, Myanmar, Philippines Pakistan, and Bangladesh are consumer as well as producer of rice.

Top paddy rice producersвЂ"2005

(million metric ton)

China

182

India

137

Indonesia

54

Bangladesh

40

Vietnam

36

Thailand

27

Myanmar

25

Pakistan

18

Philippines

15

Brazil

13

Japan

11

World Total 700

Source:

UN Food & Agriculture Organisation (FAO

http://en.wikipedia.org/wiki/Rice

The governments of these countries have different budget policies for successful cultivation of rice. However some of the countries could do better with more investment in steps to increase the production of rice to cater to demand. Majority of the countries come in the developing arc hence cultivation of rice is a major concern as it is also for export purposes as it contributes to GDP. Farmers survive on cultivation of rice. It’s a common scenario in South East Asian countries as the climate and the soil condition is favorable for growth of rice. They have abundance of rain and fertile land to complement agricultural growth unlike the Middle Eastern countries as they are generally dry, hot and humid. Egypt is also a producer of rice. The UAE is a major importer of different brand of rice as it has to cater to vast spectrum of nationalities. Its barren, dry, arid lands cannot cater to paddy fields along with the climate being dry and hot more then 7 months in a year. It even experiences very little rain which leaves it with no choice but import heavily to supply for the large demand. Rice is a traditional food and is usually associated with cultural aspects of many countries.

Hiking of Current rice prices.

Petrol prices have been fluctuating in recent times.

Factors affecting rise are :

o USA is the major consumer of energy in the world hence demands has touched unprecedented levels.

o China’s economic growth has increased but 40% hence they are also a huge consumer of energy.

o Oil refineries in the USA have been deteriorating hence unable to cater to high demand it requires.

o Oil producing countries have been hiking their price to keep up with the depreciation of the American Dollar.

o Iraq been unable to supply due to the invasion of USA-UK as the pipe lines have been exposed and subjected to constant war and turmoil.

o OPEC been unable to pump out more petrol to serve the current demand.

To compensate for the low supply of energy large volumes of crops have been taken for producing bio fuel.

Factors affecting low supply and high price of rice are:

o Drought in Australia and Ukraine

o South East Asian countries recently suffered nature’s wrath.

o High cost of transportation as fuel prices are up.

o Poor government policies like export ban or high tariffs to maintain their