Question

Please tell us about a price that has recently changed and tell us why. Provide a link to a news article about the good or service you chose. Remember, news articles don't always get the economics right; you article doesn't need to grounded in solid economic theory, it's simply a link to information on a price change in the real world. You are the one who will explain the economics to us in your post. Use what we learned in this chapter -- that the price is the result of the interactions of supply and demand -- use supply and demand to explain why the price is what it is and what causes it to be so.

Here is an example of great work:

Every summer I notice that the price of tomatoes falls. I figure that this is because tomatoes grow best in summer, although they can be grown in greenhouses year-round. This would be modeled by a rightward shift in the supply curve. At the same time, I think demand for tomatoes probably increases in the summer as well since people tend to eat more salads and lighter foods in the summer - this would be a rightward shift in demand. Since both curves are shifting right, but I observe the price falling, it must be that the shift in supply is greater than the shift in demand for tomatoes in the summer. Since both demand and supply are shifting to the right, but the price falls, it must be that the shift in supply is greater than the shift in demand.

Answer 1

From the above example

Let take an example of McDonald 's corp

Recently we can see change in price level on the selected menu of McDonald the main cause of rising their price because of rising cost of agricultural commodities

The ingredients which are used in the product are mainly from agriculture like wheat , tomato, onion, lettuce etc all this product are derived from agriculture

Since agriculture depends on rainfall. Let take if the price for winter wheat are soaring because of export Control and bad weather conditions in certain part of the country . If the supply of wheat is fall as compare to demand for wheat there will be rise in price.

Hence demand for the wheat is change not because of price but because of other factors like change in fashion, agriculture, taxes and so on.

At higher price, also demand remains same hence demand curve shift to right

Due to shortage of agricultural commodity supply cannot increase even if price rises . Hence decrease in supply shift to left due to bad agriculture conditions

All agricultural goods are necessary goods or inelastic hence even with change in price or less change in price the demand for the product remain same or slight change

When the price of McDonald items rises still people ready to spend high on those goods because nowadays people are addicted to fast food rather than homely food hence this would lead to increase in demand and it shift to right from the original demand curve

As price rises because demand is more than supply hence there is right shift in demand curve but supply curve shift to left

I hope I try to clear ur doubt pls give thumbsup