Factors affecting demand and supply of the yoghurt ice cream stall.
Determinants of supply
Price of product
As illustrated by the law of supply, the price of the good itself affects the quantity of the product that is supplied. Hence, at a higher price, a higher quantity of yoghurt ice cream will be supplied, ceteris paribus.
Government policies
Taxes and subsidies
In Singapore, all goods and services are charged with a tax of 7% currently (also known as GST). This would similiarly apply to our yoghurt ice cream which is indirect taxation to consumers. However, since yoghurt ice cream is known to be healthy and beneficial for one's health, the government may subsidize the production of this good, thus directly lowering the cost of production for our yoghurt stall.
Size of Industry
Although there are 3 different competitors selling ice cream in AMK, our stall is unique in a sense that we are the only stall to sell yoghurt ice cream in AMK.
Natural Factors
Natural factors such as widespread epidemic and changes in weather conditions are generally outside the control of man. Thus the supply of raw materials may sometimes be disrupted. For example, during the mad cow disease period, less milk are likely to be produced as cows are the main source of milk. This causes a fall in supply of milk and increase the price of milk.This wil result in a fall in supply of yoghurt as cost of production increases.
Cost of Production (COP)
Milk, which is one of the main raw materials in making yoghurt, has been in high demand recently. This has contributed to a higher price for milk. This will increase the cost of production and result in a fall in supply of yoghurt.
Factors affecting demand
Population
When the size of population increases, the demand for yoghurt ice cream will also increase as there are more consumers in the market.
Tastes and Preferences
As reported in the news recently, the consumption of yoghurt will be beneficial to one’s health. This includes reducing the possibility of getting high blood pressure. Thus, consumers are affected by such health considerations and switch to consuming yoghurt products, resulting in a rise in demand for yoghurt ice cream.
Price of the good itself
The price of the good will also affect the demand as from the extract, we can see that there are 3 other main ice cream competitors competitng in the ice cream market. Hence, if the price of the good is high in our stall, then consumers might turn away from our ice cream and choose to consume other ice creams which are relatively cheaper in prices which would lead to a fall in demand of our yoghurt ice cream.
Price of related good
There are three different competitors selling ice cream of varying standards in AMK. The price of these ice creams will affect the demand of the yoghurt ice cream in our stall. If the price of ice cream in the market is relatively more expensive compared to the yoghurt ice cream in our stall, consumers will switch from other ice creams to the yoghurt ice cream as it is relatively cheaper in price. Thus this would lead to a rise in demand of our yoghurt ice cream.
Income
With an increased in income for singaporeans, it is likely for demand of normal goods such as yoghurt ice cream, which is a form of luxury, to increase as people are able to afford these luxuries now and are more willing to pay for them. Hence this will lead to an increase in demand with the rise of income.
Setting up a yoghurt icecream stall
Choice here is between career choices after A levels examinations. Out of the 2, only one can be chosen, hence explaining choice where among the possible alternatives, the best has to be chosen. In which, to set up a yogurt ice cream stall is a choice over going to university in this case.
Opportunity cost
The opportunity cost is defined as the cost of the next best alternative forgone. In this case, the next best alternative would be the university career path that is forgone to set up the yoghurt ice cream stall. Due to scarcity, choosing to set up a yoghurt ice cream stall will prevent us to go to the university, thus incurring an opportunity cost of going to the university.
Main topic
Choice
Choice here is between career choices after A levels examinations. Out of the 2, only one can be chosen, hence explaining choice where among the possible alternatives, the best has to be chosen. In which, to set up a yoghurt ice cream stall is a choice over going to university which relates to opportunity cost as it will lead to an opportunity cost of going to a university.
Subtopic
Scarcity
Another scarcity incurred would be one would not be able to go into one's desired career choice and set up a yoghurt store at the same time. So a choice has to be made as stated below.
The scarcity in this situation is the finite raw materials such as milk. Since human wants are unlimited while resources are finite, scarcity has incurred in this situation.
