Business Economics?? | Master Of Business Administration

Business Economics?? Discuss one (1) recent price change that you have noticed while visiting your local supermarket. Speculate on whether the price change that you identified was the result of a change in supply or a change in demand. Provide a rationale for your response. (I live in Baltimore Maryland so please consider that when you answer the question because prices or different in each state)

Business Economics?? | Master Of Business Administration Ans: Prices of food products (that are sold in supermarkets) have registered significant price changes. Non vegetarian food including veal, beef, eggs, seafood and pork, fresh fruit and dairy are experiencing an above average price increase. Other vegetarian items of food category (including fresh vegetables) are having below average inflation and in some cases deflation as well. The prices of veal and beef are clearly affected by the sudden drought that has affected the Oklahoma and Texas area. The drought has affected the supply of animal food and hence the prices have increased by a certain extent. Egg prices are also expected to rise more because of the effect and influence of HPAI or Highly Pathogenic Avian Influenza  virus that adversely affects the table-egg laying poultry birds. Meanwhile, the adverse effect that PEDv or Porcine Epidemic Diarrhea virus casted on the hog/pig industry is now on decrease and the industry is recovering and registering expansion. Hence there is a growth in supply of the meat food.

Business Economics?? | Master Of Business Administration

According to ERS (Environmental Risk Management and safety Inc), the supermarket food will register a slightly lower-than- average increase in food-price inflation, which will increase from 1.5% to 2.5%. The food inflation will be different for different categories. Prices if veal and beef will have the same trend of increase in price because of their supply affected by drought. The production process cycle of the beef industry has a time-period around 18 months and the decisions that farmers take on the cattle herd sizing and calving will have a significant impact on the prices throughout the coming months.

If the weather conditions remain normal then the inflation rate may only increase marginally, from 2% to 3%. There is also an ongoing drought that affects the state of California. If the same conditions prevail then prices of vegetables, fruits, eggs and dairy products will have an increase in prices because of the disruption/lowering of supply of these edibles from the state.

The oil prices also have an impact on the prices on these edibles that are sold in supermarkets as oil is an important transportation cost that adds to the price of the edibles and food products. In the past 6 years or so, the production of crude oil has double in USA and hence the prices of oil have fallen dramatically (because of cheaper home-produced oil supply). The decrease in oil prices will have a favorable impact (for customers) on the food prices.

References:

  1. Findings: Food Price Outlook. (2015, September 25). USDA. Retrieved from freeassignmenthelp.com.ers.usda.gov/data-products/food-price-outlook/summary-findings.aspx
  2. Kruass C. (2015, October 5). Oil prices: What’s Behind The Drop? Simple Economics. The New York Times. Retrieved from freeassignmenthelp.com.nytimes.com/interactive/2015/business/energy-environment/oil-prices.html