Kan Zhanna

20001057

What do you think about connection between the weather in China and the price on apples in Kazakhstan?

In fact, there is a rather close relation, that proves international markets are interrelated.

Some years ago freeze in China reduces the supply of Chinese orange (note, that China is the main supplier of citrus fruits in the market of Almaty (cheaper price, good quality, so on).

As a result some consumers would switch from oranges to apples, as well as to other deciduous fruits.

As the demand for apples rises (from 60 tg to 100). Their prices rise as well.

Q2 Q Q1 Q

Orange's market Apple's market

As we can see from graphics figure 1 increase of oranges' prices grower prices of apples and rise demand for apples from D1 to D2.

The rise in the price of oranges would have effects on all orange market, because fresh oranges are the raw materials from which orange juice is made.

1. Why increase of oranges price would rises the price of apples?
2. They are:

1. substitute
2. independent
3. complementary

1. What effect would have the rise in the price on other market as well?

Can you construct relationship between demand and supply for market for orange juice?

2. What happened to market for orange juice cans and other containers since the price is gone up?

Can you show it and explain in each case, determine the changes in price and quality?

3. Do the same to explain the effects of a shift in consumer preferences from; for example, visiting movie and theaters to watching videocassette movies on television.
4. What happened with prices if demand would be relatively inelastic? If demand would be relatively elastic?