Free Sample on Specialization And Economics For Business

Question: Discuss about the Specialization and Economics for Business. Answer: Introduction According to Case , Fair and Oster (2012), demand and supply are the most important and basic economics terms, that are used in every aspect. Demand states a consumer's willingness to pay for a particular goods or service. According to the law of demand, demand for a good or service increases with the decrease in price and decreases with the increase in price, ceteris paribus. This depicts the inverse relationship between the demand and price of the commodity. Supply deals with the total amount of good or service that a supplier or the producer is willing to sell. The law of supply states that the supply of a good or service increases with an increase in price and decreases with a decrease in price, ceteris paribus. This illustrates the positive relation between price and supply of a good or service. As stated by Yang and Ng (2015), to achieve equilibrium in a market, there should be an interaction between the demand and supply of the particular good. The place where the two curves w ould intersect would be known as the equilibrium point. The corresponding price is the equilibrium price, and the quantity is the equilibrium quantity. In this essay, a case study would be analyzed, based on the hike in the price of goat meat in Australia. A detailed structure of its demand and supply of the Meat And Livestock Industry Of Australia (MLA) would be considered. It would be seen how the difference in the demand and supply of the product creates a gap of excess demand in the economy that is overcome by raising the price. Analysis As per Mla.com.au.(2016), carcass prices have risen to $5.80 per kilogram. This accounts for almost 30 percent of hike in the price than a year ago. This price hike is the case of excess demand for these hardy outback mammal over its supply. Australia is one of the largest producers of commercial livestock and a leader in the export of read meat and livestock. The total value of this industry is A$17 billion. According to ABC Rural (2016), as its a leading exporter, the industry has to meet the demands both domestically and internationally. 95% of the total production of livestock is used in the export industry. 50% of the meat is exported to U.S whereas, other 50% is exported to other countries including to South East Asia, parts of China, the Caribbean, and even the Middle East. Australians consume an average of 40.9kg of red meat each year. Meeting the demand of the sectors, with a tight supply forces the price to rise. Figure 1 : Demand and Supply scenario of red meat in Australia (Source : As created by author) In figure 1, D and S are the demand and supply curves of goat meat in Australia respectively. Last year the price of meat was 4.46 A$ per kilogram. The providers were unable to fulfill the demand of the domestic demand for meat. This led to a gap of excess demand in the industry. At that price, the quantity demanded was QD1 whereas the quantity supplied was QS1. Thereby creation an excess demand gap of QS1-QD1. To overcome this gap, the cost of meat was raised this year to 5.80 A$ per kilogram. Increase the supply of meat to overcome the huge demand at one go, was not possible. With the raise in price, the demand for meat decreases to QD2, thereby following an inverse relation with the price of the product. Whereas, some providers to enjoy such a rise in revenue, raise their supply to QS2. This reduces excess demand gap to some extent. The new excess demand is QS2 to QD2, which is lesser in comparison to the difference earlier. It has been forecasted by the MLA, that this increase in price would continue in the forthcoming months until an equilibrium point price Pe is achieved (Petroff 2013). The main reasons for the tight supply of the meat and livestock industry of Australia are the export industry, where the primary produce of the country is being exported. Thereby, leaving a mere 5% of the total produce for domestic consumption. The kidding process, of this industry, takes time to raise the supply, as there is a minimum weight attribute of every goat that is to be fulfilled. The cattle raiser needs to raise his stock for a given period, thereby, blocking the ways of increasing the supply rapidly. Still, some raisers have started supplying the meat without fulfilling the minimum weight perspective, to meet the demand. The goal of the firm is to attain maximum profits (Bowen and Sosa 2014). According to Henchion et al. (2014)Demand side faced by the industry is affected by the quality of meat produces in the country. The production is done on a big scale thereby been counted as one of the leading countries in production of livestock. It is also the leader in exporting red meat. These attributes favor the demand to increase day by day. Australians are meat lovers, their consumption of meat accounts for an average of 40-kilogram meat per year. This ensures that the tastes and preferences of the people have been fixed for many years. With the increase in price to fulfill the gap, the demand decreases to some extent, showing the inverse relationship between price and demand. There are least substitutes of red meat in the country; hence there is no change in the demand pattern. Conclusion The aim of this essay to analyze the aspects of demand and supply of a product. This has been done by examining the state of red meat industry in Australia. According to the facts stated by the Meat and Livestock Australia (MLA), it has been noticed that there is a sharp rise in the rice of meat, due to the lack of supply of the product. This unavailability of fulfilling the demand of meat lovers is because of the increase in demand both domestically and internationally. The suppliers are unable to raise their stock at the current level, thereby creating an excess demand gap in the country. To overcome such demand, prices are inflated, thus focussing on the negative relation of price to the demand of the product and the positive relationship of price with its supply. Measures are taken to overcome the supply need, by encouraging more producers to raise goats as a long-term sustainable option for their business. By maintaining perfect records on the goat population, harvesting rate of the wild population, percentage of goats being slaughtered regarding those being maintained, it would help them to forecast the supply in the coming years. Till then the demand could be only reduced by increasing the price of meat. References ABC Rural. (2016). Goat meat price hits all-time high. [online] Available at: https://www.abc.net.au/news/2016-06-02/nrn-rural-goat-price-hike/7470260 [Accessed 24 Aug. 2016]. ABC Rural. (2016). Goat meat prices at record levels as international demand grows for Australian product. [online] Available at: https://www.abc.net.au/news/2016-08-03/goat-meat-prices-at-record-levels-as-international-demand-grows/7686870 [Accessed 24 Aug. 2016]. Bowen, W.G. and Sosa, J.A., 2014.Prospects for faculty in the arts and sciences: A study of factors affecting demand and supply, 1987 to 2012. Princeton University Press. Case, K.E., Fair, R.C. and Oster, S.M., 2012.Principles of economics. Prentice Hall,. Henchion, M., McCarthy, M., Resconi, V.C. and Troy, D., 2014. Meat consumption: Trends and quality matters.Meat Science,98(3), pp.561-568. Mla.com.au. (2016). Homepage. [online] Available at: https://www.mla.com.au/ [Accessed 24 Aug. 2016]. Petroff, J., 2013. Demand and Supply. 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