case study

1. The prices of daily essentials, including fruits and vegetables, have skyrocketed
in the last five days due to short supply of the commodities in the local market, as
the trucks and containers laden with the essential commodities have been unable
to enter Nepal via India.

Despite the continuous protest in Terai since over a month, Terai farmers had been
unable to sell their products in the market as a result the price of vegetables had gone
up significantly until now.

As the trucks and containers were unable to enter Nepal since Thursday, the vegetable
prices have soared in the domestic market. The price of potatoes (red and white) has
increased by Rs 10 per kg each to Rs 55 and Rs 45, respectively. Similarly, price of
brinjal has gone up by Rs 43 per kg. The price of cowpea, on the other hand, has shut
up by whopping Rs 20 per kg to Rs 65 per kg, as against Rs 45 per kg last Thursday,
according to Kalimati Fruits and Vegetables Market Development Board
(KFVMDB).

Tejendra Prasad Paudel, executive director of KFVMDB, said that vegetable prices
have rocketed due to short supply. “The uncertainty in import situation has also
resulted in the price rise of vegetables.”

As per the price list of KFVMDB, prices of other vegetable and fruits have also
increased heavily. The price rise especially of potatoes and onions is mainly due to
uncertainty of import from India, according to Paudel. Price of dry onion has soared
by eye watering Rs 50 per kg compared with Rs 105 per kg last Thursday.

Even the price of other vegetables that are produced within the country has gone up
due to low supply created by Terai protests. Price of pointed gourd (parwal) and
balsam apple (barela) have increased by Rs 10 per kg each and their prices have been
fixed at Rs 55 and Rs 75 per kg, respectively.

Likewise, price of fruits have also gone up substantively. Price of pomegranate has
increased by Rs 20 a kg to Rs 255 per kg and that of pineapple by Rs 10 per piece to
Rs 105. Price of guava has increased by Rs 18 per kg to Rs 53 per kg, according to
KFVMDB.
Price of fresh fish has also sky-rocketed by Rs 100 per kg (nearly 40 per cent) and is
fixed Rs 355 per kg, compared to Rs 255 per kg on Thursday, demand of fish falls
from 95000 kg to 89000 kg.

Questions:

(a) What causes are mentioned to rise in price in above case?

(b) What are the factors that affect demand?
(c) Why supply of vegetable has affected in market?
(d) What are the other responsible factors that can affect supply?
(e) Calculate elasticity of demand for fish.