Economics is a fundamental field that has its own recognition and importance in every walk of life. The term economics are generally referred as the stance of earning and consumption at a place where, the probability of earning would be higher than consumption. The study of economics signifies that how a person, company or government can manage their insufficient resources in order to meet their unlimited desires. However, the economics are segmented into two groups that are microeconomics and macroeconomics. The focus of Microeconomics is usually stridden on individual consumer through examining the behavioral elements in them. The elements of behavior can be of individual mediator or market, their interaction and its consequences. In contrast, Macroeconomics usually deals in examining the behavior of the entire economy, and it mainly consists of total production, households, entire consumption, etc. Hence, it could be said that economics is the name of the dismal science that represent the findings of different facets of the society. The main perspective of this assignment is to analyze the economic consequences of two different scenarios in particular. Effective economic analysis should have been applied on the same. The assignment has been distributed into different sections, and each of the section is important to complete accordingly.
The names of the market in which both of these scenarios include are Perfect Competition market.
There are two different scenarios which have been given with this particular analysis and both of the scenarios would be effected the demand and supply side of the products. The two scenarios which have been taken into consideration for the same are disease affected chickens and Toyota spare parts increased. There are different questions that needed to be answered in this particular analysis to complete each part of the report
Chicken Disease Increases Economic Analysis
Which Side will Be Effect Demand or Supply
The demand and supply are considered as the most valuable and fundamental concept in economics. The theory of demand & supply is the backbone of any market to keep exchanging of goods. The whole framework is applied to catch out the price determination of the market. The “Demand” signifies to the number of products or services (quantity) needed by the buyer. Demand for a product generally refers to people that is willing to buy a certain amount of price; the relationship between price and demand can be termed as demand relations. In contrast, Supply refers to the quantity offered in the market. The supply of quantity usually means when some producers are willing to accept some good at a given price. The association among value and the quantity or services offered in the market is regarded as supply relationship. Hence, the price is the outcome of supply and demand. Inevitably, the correlation between demand and supply certainly motivate such forces that are behind in allocation of resources. However, in different market based economic theories, the essence of the demand and supply model will apportion resources in the best possible manner. It is concluded that, in a highly aggressive market, the stock price of a specific item will vary until it lies at one point with the consumer (at current price) will equal the supply demand balance sheet producers (by current prices), leading to economic equilibrium of price and quantity. General, in the case of deficiency in the supply and high demand, the price will be elevated. However, in contrast to aforementioned case, the price will be to its least level
The concept of Demand and Supply is extremely important from the viewpoint of the organization and for an economy as well, as it is a concept through which the price and demand of a certain product would have been analyzed accordingly in a given economy. Due to different events, both sides like Demand and Supply would have been affected considerably, and it could be found from different angles. There are two different events which have been defined in this particular analysis and both of these events would affect over the demand and supply stance of such product in particular. It is required to apply the concept of demand and supply over the analysis and make a graph related to the same.
Diseased Affected Chicken
Mentioned below graph is revealing the story
What is the new Equilibrium Price and Quantity?
Equilibrium refers to a certain point where the supply and demand of market balance one another and create steady prices consequently. Typically, the time when the supply of goods and services stand at peak level, the price would be decreased that leads to higher requirements. The provision of balancing supply and demand poses positive results in the shape of equilibrium. Equilibrium price can also be known as economic equilibrium is the price where the supplies meet the market demand. When a major indicator experienced a consolidation or indirect trend over time, it is clarified that the supply and demand forces are comparably equivalent; the market lies under the condition of equilibrium. It can be seen in the graph when the hypothetical curves are intersecting with each other at a certain point. Moreover, it can also be exploited in numerous variables, for instance interest rate that enables the institution as banking and financial to judge the considerable growth. The equilibrium price may be either static as well as dynamic and ensure its presence in single or several markets. In some cases, the economic equilibrium can be dislocated due to variations in consumer selection and as a result, the demand goes down and originates the scenario of oversupply of products in the market.
The essence of equilibrium price is extremely important from the standpoint of a product, and it is also quite important for a product. In both of these events, there will be a change in the price as well as in the quantity that would have been consumed accordingly. We have to suppose the price of both of the products and the supposition amount is $ 100.
Refer to the below mentioned graph
Substitute and Complement
The substitute of chicken is the meat of beef and mutton and if the consumption of these beef would increase then mentioned below graph could be found
Economic Analysis of Toyota Spare Part Increased
On the other hand, it is found that the spare parts of Toyota are increasing. Toyota is one of the largest automobile companies of the world. A Japan based multinational company which manufactures automobile of different models and levels accordingly. Toyota has some showrooms in which the spare parts exist on a higher scale, and if such spare parts are increasing in the economy, then it means the consumer can get the spare parts in low amount of money, which is a good sign for the economy. This particular event would certainly affect the good to get increased accordingly. The consumption of Toyota Spare parts would increase considerably due to this particular event. Demand of the Toyota products along with their spare parts would increase heavily with the help of this particular strategy which affect the consumption side of the company in particular.
Toyota Spare Parts Increased
Likewise, the above mentioned event, there is yet another important even that needed to be done accordingly in this particular analysis. The spare parts of Toyota are increasing which means that the availability of the parts of the company is increasing heavily which may bring effectiveness in the consumption of such parts in particular. In this way, the demand and supply side would affect considerably, because Toyota is in the favor to increase the spare parts and people are also in the favor to consume the same in a lower price.
Mentioned below is the graph representing the same
There is a clear difference has been found among the old demand and old supply along with new demand and new supply in particular that could be found in the above mentioned example. The demand as well as supply of the product has increased considerably. However, the demand has not increased as heavy as the other supply side which is showing that people are not in the favor of consuming the spare parts of Toyota in heavy concessions. Both of these views have a considerable effect over the pricing function of the company.
Is this Effect Positive or Negative
Both of the scenarios are different from each other as the first even in which the diseases in the chickens are increasing is quite negative for the consumers in particular, which affect over the demand and supply side, as well. The demand as well as the price of the function has decreased considerably well which may be ineffective for the chicken provider but not as ineffective for the consumers because they will get the chicken at the lower price, but it will harm their health heavily.
On the contrary, the effect of increasing the spare parts would be effective for the consumers, as spare parts could be got at lesser price by the consumers that would certainly boost up the demand function of the product considerably by decreasing the price of the product in particular. The graph of old supply and new supply is representing the same in particular.
For the second scenario the graph is mentioned below
The equilibrium price is not decreased much as compared to the price of chicken because the demand as well as supply has increased considerably. The quantity in this particular scenario is increased considerably, but not the price.
Substitute and Complement
The substitutes of the spare parts of the company are the spare parts of other companies like Honda and others. Mentioned below graph could be taken into account
The new demand of Toyota is increased, and it also increased the price of the company, while the spare parts of other companies demand decrease along with its supplies after increasing the spare parts of Toyota in the market.
Sustainability is very crucially important because all of the choices that organizations pursue and all of the actions that they make today would affect many things in the future. The companies would also need to make correct decisions today for the avoidance of restricting the choices of generations when they come. An example would be if the companies and big businesses continue to waste water and pollute the fresh water supply which we have today, then and leaving the people on their current consumption level. This could also be assured that if this happens all of the life that depends on pure fresh water would become extinct. The main perspective of this assignment is to analyze the economic consequences of two different scenarios in particular. Effective economic analysis should have been applied on the same. From the entire analysis, it is found that the scenarios would certainly impact over the consumption level as well as on the prices of the products in particular and these things should be considered accordingly. All of these provisions are important for the sake of the economy in particular, and it needed to be considered accordingly. Both of these scenarios have been completed accordingly and effectively, and it is found with effectiveness.