Effects of hoarding on market prices Essay Example | Topics and Well Written Essays - 750 words

Effects of billboard on mart prices - Essay ExampleAs a basic economic rule, whenever a translate of a event item is less than the metre demanded, the former puts inflationary pressure on the price of the goods and prices increase, if the quantity supplied could non match the quantity demanded. This butt joint be shown through pictorial representationThe above diagram shows how lay away affects the equilibrium condition in the mart and increases the martplace prices. If we explain the above diagram, we can easily estimate that the Indian food is at a point e, where demand and supply equal at mart price p1 and at quantity Q. However, as soon as the hoarding activity, this results in supply edit being shift to s1 from initial supply curve of S. As a result of this a rude(a) equilibrium is formed at the point e1. At this point the quantity is below the initial quantity of Q at Q1. (Sloman, 2004) Similarly, due to this a shortage has been created and people with more money be ruling the market by the virtue of being able to pay high prices. As a result the market price of food items increases high and now the food stuff is available at a higher market price of p1. As a result this hoarding decreases the supply and increases the market prices. ... Now, lets assume that at the time when hoarding activities are going and due to poor crop the going market prices are set at the price p. However, due to effective government action mechanism against hoarders and release of buffer memory into the market, the supply of food items in the market give now increase to a new supply position of Se. We can clearly see that Se is rightward of the supply curve at the time hoarding that is Sh. This shows that the supply in the market has increased. This increase in supply heart that there is more food stuff now available in the market at quantity Qe. This will reduce the market prices from previous prices which at the time of hoarding were at ph to pe. This analysis clearly shows how effective action by the government against hoarders can reduce the market prices and bring inflation of food items under control. Thus, we can assume that the article is suggesting the right ploy by which the Government of India can bring prices under control. (Clermont, 2009) some other issue that has been raised in the article is how India is using measures to reduce their trade deficit by introducing trade benefits for businesses in India which will increase their competitiveness in the international market. This means that government will violate them tax holidays. As a result of which cost of production in India will reduce which will lower the prices of Made In India products. As a result of which imported goods for Indians will become expensive and hence Indians will prefer domestic production and hence reduce imported goods. This will means that India will have a lower cash outflow and hence this will improve the external trade situation in India.