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Oats In Canada

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This article discusses the price movement of oats in Canada due to a shortage in supply. Two major concepts present in the article is the law of supply and law of demand. The law of supply states that there’s a positive relationship between the price and quantity supplied of a good ceteris paribus; as price increases, quantity supplied increases. The law of demand, states that there’s a negative relationship between the price and quantity demanded of a good ceteris paribus; as price increases, quantity demanded decreases. Both laws involve ceteris paribus; all variables besides the ones being studied are constant. The main reason for the rising price of oats is due to non-price determinants of supply; any variables other than price that causes…show more content…
The change in supply results from a nonprice determinant; the rain and snow. Because of this, the oat harvest has been delayed and farmers are unable to harvest as much as they were capable of in previous years. Because oats are a primary commodity; a product produced in the primary sector, they have a fairly inelastic demand because they are a necessity without many substitutes. The change in prices will cause a drop in profits for farmers and producers.The poor weather conditions also affects the quality of the oats as a result, more oats end up as food for the livestock instead of being sent to producers who manufacture oat products. The supply curve shifts leftwards and leads to an increase in price from P1 to P2 and a decrease in quantity supplied from Q1 to Q2.

Figure B: Supply and Demand for Producers of Oat Products Figure B shows a leftward shift in the supply curve from S1 to S2 for producers who require oats for production. Due to the non-price determinant that caused farmers to acquire less supply, this in-turn results in a smaller supply for the producers. Furthermore, a smaller supply means the prices of oats will rise and the producers will require more money for production. This results in an increase in price from P1 to P2 and a decrease in quantity supplied from Q1 to Q2.

Figure C: Consumer’s Demand for Products with
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