MICROECONOMIC

Microeconomic



Microeconomic

Introduction

The focus of this paper would be Microeconomic that deals with behaviour of household individual and firms and this further assist in decision-making. Paper has been divided into two parts, part one will cover Trend Analysis considering factors that influence on price while part two will cover Indifference Curves along with utility function scenario.

Part One: Price of Tea in Bangria has changed over time

According to theories, prices of particular product have been influenced by its demand and supply. This should be noted that markets impacted via price un-predictability and they are further influenced by various factors both internal and external to the market. Tea Market has direct relationship with seasonal factors as it affects quality of tea leaves and hence, ultimate result is either high demand or low supply or vice versa (Nicholson, Snyder, 2012, p. 302).

1. Describe the trend in the Bangrian tea price between 1965 and 2005.

Looking at the Bangrian Tea Price Trend, it shows that tea prices of Bangria have been fluctuating from 1965 and 2005. From 1965 to early 1970, one can observed a slight downfall during 1966 to 1968 while during 1969 tea prices increased till 1970. At 1970, Bangria has experienced highest increased i.e. above $0.5. This trend declined after experiencing a peak in 1670 and they managed again to be on track after 1972. This increasing trend continued till 1977 where Bangria has experience huge increase in tea prices i.e. from $0.75 to $3.00. This increase might be due to tight supply from producer or due to quality of leaves that has resulted in this situation. Furthermore, increase in tea prices is also due to lower production capacity and meeting high demand (Jain, Ohri, 2010, p. 57).

Tea prices slight started to decline from 1977 to 1978 from $3 to $1.75. A declining trend state that either demand has been reduced or oversupply of tea in the market has resulted in this situation. Tea prices recovered from early 1978 to 1980 and managed to be for $2. Bangrian Tea Price adversely declined from 1680 onwards and after 1985 they managed to increase their price approximately to $2.75. Again a huge downfall from 1986 to 1992, during these years Bangrian Tea Price decreased to $0.6 which might be due to oversupply of tea leaves or due to other substitutes in the market (Gottheil, 2011, p. 85). In early 1994, tea prices increased and again declined in mid of 1966 and increased to $1.75 during mid 1997. Trend reduced after 1997till 2002 from $1.75 to its original price that was in year 1965. After this, during 2002 onwards tea prices trend increased to 2005 and as prices managed to be constant.

Overall, Bangrian tea price between 1965 and 2005 had experienced huge ups and downs due to numerous factors. Entire trend has been fluctuating and prices during these years were between $0.47 to $3. Highest teas price was $3 while lowest price was $0.45.

2. Demand (D) and Supply (S) diagram of Bangria

In ...