Economics; Butter Shortage
Word Limit: 1250 words
In the article under consideration, there exists a shortage of butter. Such a deficit in Australia is likely to affect the consumers as well as the suppliers. Macro and microeconomic concepts deal with the interaction between supply and demand as well as other market forces. Consumers play a vital role in the economy by buying the goods they need as well as informing the production decisions. The suppliers may also set the prices within the market as well as determine the amount of goods that will be available to the consumers.
Taking into account a purely competitive market, there will be a substantial number of firms within the market that produce standardized products. This means that the companies are allowed to compete with each other favorably depending on the existing market forces. In pure competition, the market prices are set by the consumer demand (Parkin and Bade, 2015). This ensures that the suppliers do not have control over the existing market prices and they can be described as price takers. The large number of entities in such a market is occasioned by the low barriers to entry. New firms can offer substitutes in the market and can force better prices in the market which may force other entities to follow suit.
Assuming that the butter market in Australia is pure competition, one can come up with a demand and supply graph to illus…
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