The Cold Wave And Foggy Conditions Of North India Have Hit Truck Movement
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Based on the article that I have studied, the Cold-wave and foggy conditions in North India have hit truck movement, affecting availability of some vegetables in cities like Delhi and driving up prices. The weather, along with light rains, has also hampered growth of winter vegetables that are in the fields. Cauliflower, capsicum, brinjal, okra and bitter gourd have become 20-50% costlier because of short supply. Traders expect the sky to become clear and the supply situation to improve in 15-20 days. But some retailers say prices could go up even higher if temperatures fall further and ground frost damages vegetable crops.(Sally,2014)
It is important to know the presence of substitutes in the market because the demand of a product can be…show more content… The price changed from P1 to P2 as the supply curve shifted to the left as shown in Figure 2.
As for rising demand for India tomatoes by Pakistan, price of India tomato has also risen to Rs20 per kilogram, which is 10% higher than the previous price.
When consumer surplus is taken into consideration, with an increase in price charged, consumer surplus will reduce and producer surplus will increase because consumer surplus has now transferred to producer surplus therefore causing a dead weight loss. Dead weight loss is the reduction in economic surplus resulting from a market not being in competitive equilibrium (Hubbard and O’Brien, 2014).Dead weight loss happens where there is a decreasing in numbers of the supply. Consumers experience shortages and producers earn less than they usually would earn. This will causes the society to be the loser as both parties does not gain any benefit as shown in Figure 3, Figure 4, Figure 5.
In this case, vegetables market is considered as a good example of perfect competition in which it have many sellers, have the same or undifferentiated products, the freedom to entry and exit the market freely and they are not able to set their own price because they are price takers not price setter. When a firm attempt to rise the price by the smallest possible amount, customers would notice it and will stop buying goods from that