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Analysis of Price and Quantity of Garlic

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Submitted By chelleX3
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Summary

According to the Malaysia Foodstuff Import and Export Association, the price of garlic has increased drastically to RM 8-9 from RM3 per kg in Penang and RM 8-9 from RM 4 per kg in Klang Valley. The cause of shortage of supply is mainly due to the bad weather in China.There has been a drop of 30% in production of garlics in China. Many suppliers in Malaysia would stop importing garlics from China as the price was increasing rapidly around that time. Therefore, they would rather wait until the price back to normal before importing again. Furthermore, they need to set up some new facilities to maintain the freshness of garlic during the period of limited supply of garlic which also increase the input cost.

Introduction A rise in the price of goods will affect the quantity demanded of goods in the market. Quantity demanded is the amount of a good that buyers are willing and able to purchase. Also, the law of demand claims that, other things equal, the quantity demanded of a good falls when the price of the good rises. So, when the price of the good itself varies, the demand will not shift in a parallel manner, yet it shifts along the demand curve.

Besides, a curve shifts when there is a change in a relevant variable that is not measured on either axis. For example, a bad weather can cause a reduction in supply of goods to suppliers.This can lead to a decrease in supply. Therefore, it shifts leftward, leading to a rise in price.

Analysis For example, the price of the garlic has increased from RM 3 to RM 8-9 per kg in Penang and the price of the garlic in Klang Valley went up from RM 4 to RM 8-9 also. As the price of garlic goes up, the quantity demanded of the garlic falls as stated in law of demand. Therefore, there is an upward movement along the demand curve.

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