Professional Documents
Culture Documents
Submitted by:
Kay Ann A. Agoyaoy
BSA2 11:30-12:30 MWF
Submitted to:
Professor Mosquera
Case Study 1:
1. What will be the effect of the importation on the local consumption of rice?
Illustrate. How about on palay production?
The effect of the importation on palay production is that the farmers will be forced to
sell their crops even lower than the break-even cost. The reason is that the NFA does not have
sufficient money to buy their crops even five percent of this.
On the other hand the effect of importation on the local consumption is that the
consumers will be divided between the imported rice, which the NFA imported from Indonesia,
and the local rice. Some of they will preferred to buy the imported rice for it has the lower price
in the market while the others will choose to buy the local rice because it has the good quality
or taste.
To summon the analysis, the agricultural economy of our country will fluctuate; more
consumers will certainly buy the NFA rice than the local rice because of its cheaper cost. We
don’t need to import rice because the farmers harvest enough rice to support the need of
almost 60 million people.
2. How does NFA intend to raise the price of palay to its targeted support price
level? Illustrate.
Usually the private sectors hold or control the supply of the palay when there is a high
demand and sell it in higher cost. And they will supply more products when there is a low
demand. The reason is that as the price increases, the quantity supply of the product increases
and as the price decreases the quantity supply decreases.
3. Is the position to import rice compatible with the intention to support palay
prices?
No, because there is no local rice shortage so we don’t need to import rice. And the
importation of rice will affect the agricultural economy of our country.
Case Study 2:
1. Is the demand for beer price elastic or inelastic? Explain and illustrate.
The demand for beer is said to be inelastic. The reason for this is the consumer did not
respond to the changes of price. And because of additional taxes in beer products the sale of
beer is continuously decreasing that may result to losses in the part of the producers.
2. Availability of Close Substitutes - If there are close substitutes, buyers will move away
from more expensive items and demand will be elastic.
3. Definition of the Market - The more broadly we define an item, the more possible
substitutes and the more elastic the demand.
4. Time Horizon - The longer the time available, the easier to find substitutes and the more
elastic the demand.
5. Relative Size of Purchase - Purchases which are a very small portion of total expenditure
tend to be more inelastic, because consumers are not worried about the extra
expenditure.