The Economics of Easter Eggs
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The paper discusses how the price and quality of Easter eggs is established in a competitive market by the forces of supply and demand. The paper explains the impact of the rise in demand for cocoa and sugar and how the higher the price of cocoa is, the more likely chocolate makers will substitute the lower-quality type of cocoa in order to control costs. The paper also discusses a market characterized by pure competition, where there is no differentiation between firms, and analyzes the factors that lead to an increase in price of Easter eggs over previous years. Finally, the paper explains why demand for chocolate Easter eggs is likely to be inelastic, and why higher prices may not translate into increased supplier revenues. The paper includes two diagrams as appendices to the paper.
From the Paper:"The price and quality of Easter eggs is established in a competitive market by the forces of supply and demand. The cost of an Easter egg is determined by the costs associated with its inputs. These inputs include cocoa and sugar, two commodities that are traded on the global commodities markets. Thus, the costs of these inputs for Cadbury are related to global supply and demand, including the influence of speculators. The supply of cocoa is effectively limited by constraints on its production. Cocoa can only be produced within a relatively narrow band around the equator. This results in production being concentrated in a handful of nations. The most important producer of cocoa is the Ivory Coast. Political instability in that nation has contributed to supply shortages, which in turn have driven the cost of cocoa higher (Chiotakis, 2011). Production is also at risk from climate change and from shifts in agricultural production patterns in the main cocoa-producing nations.
"While sugar is subject to different supply drivers, this commodity has also increased in value in recent years, a combination of increased demand and decreased supply. Supplies were particularly disrupted as a result of last year's Queensland flooding (AFN, 2010), highlighting the influence of region weather and political events on the price of commodities. When combined with higher demand, such supply shocks can lead to a substantial increase in the price of such commodities on the global markets."
Sample of Sources Used:
- AFN. (2010). Queensland sugar industry will take a hit. Australian Food News. Retrieved March 20, 2011 from http://www.ausfoodnews.com.au/2011/01/06/queensland-sugar-industry-will-take-a-hit.html
- Chiotakis, S. (2011). Cocoa prices near record high. Marketplace. Retrieved March 20, 2011 from http://marketplace.publicradio.org/display/web/2011/03/09/am-cocoa-prices-near-record-high-/
- InfoGalaxy. (2003). From bean to chocolate. InfoGalaxy.com. Retrieved March 20, 2011 from http://www.info-galaxy.com/Chocolate/From_Bean_to_Chocolate/from_bean_to_chocolate.html
- NetMBA.com (2010). Price elasticity of demand. NetMBA.com. Retrieved March 20, 2011 from http://www.netmba.com/econ/micro/demand/elasticity/price/
- No author. (2011). Long term equilibrium under perfect competition. No source. Retrieved March 20, 2011 from http://vlad1mir.tripod.com/lt_equilibrium_under_perfect_competition_.htm
Cite this Analytical Essay:
The Economics of Easter Eggs (2013, May 16) Retrieved December 03, 2020, from https://www.academon.com/analytical-essay/the-economics-of-easter-eggs-153281/
"The Economics of Easter Eggs" 16 May 2013. Web. 03 December. 2020. <https://www.academon.com/analytical-essay/the-economics-of-easter-eggs-153281/>