Mooncakes – Demand and Supply
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Transcript of Mooncakes – Demand and Supply
Mooncakes – Demand and Supply4S
Gigi Leung (25)Florence Li (27)Konny Tang (33)
Cherry Yeung (39)
Content1. Introduction – What Are Mooncakes?2. Demand – Mooncakes before/during Mid-
Autumn Festival3. Comparison of Different Mooncakes –
Traditional Mooncakes VS. Jelly Mooncakes4. Case Study – Mooncakes Sellers’ Profit/Loss
(Law of Demand & Elasticity of Demand)
Introduction
Mooncakes• Traditional food eaten during the Mid-Autumn
Festival• The most important item in the Festival
Mooncakes during normal days
S1D1
P1
Q1
P($)
Q/t0
Mooncakes during normal days
S1D1
P1
Q1
Before Mid-Autumn Festival, there is no change in both the demand and supply for mooncakes. As shown in the diagram, the supply S and demand D remain constant. The equilibrium price is P1 and quantity transacted is Q1.
Before Mid-Autumn Festival, there is no change in both the demand and supply for mooncakes. As shown in the diagram, the supply S and demand D remain constant. The equilibrium price is P1 and quantity transacted is Q1.
Q/t0
P($)
Mooncakes during Mid-Autumn Festival
S1D1
P1
Q1
D2
S2
P2
Q2
P($)
Q/t0
P($)
Mooncakes during Mid-Autumn Festival
S1D1
P1
Q1
D2
S2
P2
Q2
During Mid-Autumn Festival, people will buy mooncakes for both self-consumption and gifts, leading to an increase in demand for mooncakes, the demand curve shifts rightwards from D1 to D2. Mooncake suppliers will also increase their supply of mooncakes, leading to an increase in supply of mooncakes, the supply curve shifts rightwards from S1 to S2. Since the increase in demand is greater than the increase in supply, the price of mooncakes rise from P1 to P2. The quantity transacted increases from Q1 to Q2.
During Mid-Autumn Festival, people will buy mooncakes for both self-consumption and gifts, leading to an increase in demand for mooncakes, the demand curve shifts rightwards from D1 to D2. Mooncake suppliers will also increase their supply of mooncakes, leading to an increase in supply of mooncakes, the supply curve shifts rightwards from S1 to S2. Since the increase in demand is greater than the increase in supply, the price of mooncakes rise from P1 to P2. The quantity transacted increases from Q1 to Q2.
Q/t0
Mooncakes during Mid-Autumn Festival
S1D1
P1
Q1
D2
S2
P2
Q2
During Mid-Autumn Festival, people will buy mooncakes for both self-consumption and gifts, leading to an increase in demand for mooncakes, the demand curve shifts rightwards from D1 to D2. Mooncake suppliers will also increase their supply of mooncakes, leading to an increase in supply of mooncakes, the supply curve shifts rightwards from S1 to S2. Since the increase in demand is greater than the increase in supply, the price of mooncakes rise from P1 to P2. The quantity transacted increases from Q1 to Q2.
During Mid-Autumn Festival, people will buy mooncakes for both self-consumption and gifts, leading to an increase in demand for mooncakes, the demand curve shifts rightwards from D1 to D2. Mooncake suppliers will also increase their supply of mooncakes, leading to an increase in supply of mooncakes, the supply curve shifts rightwards from S1 to S2. Since the increase in demand is greater than the increase in supply, the price of mooncakes rise from P1 to P2. The quantity transacted increases from Q1 to Q2.
D1 increase to D2
S1 increase to S2
P1 increase to P2
Q1 increase to Q2
Q/t0
Traditional Mooncakes vs. Jelly Mooncakes
• Jelly (冰皮 ) mooncakes are becoming more popular• due to the change in trend, e.g. advertisement/ fashion • Its demand has greatly increased in the previous years• We are going to look into the relationship between
traditional mooncakes and modern jelly mooncakes
DERIVED DEMAND
DERIVED DEMANDSUBSTITUESSUBSTITUES
Number of Mooncake Products Provided by the Major Producers*1 in the Market
*1 Wing Wah, Maxim's, Tai Pan
HenryA seller of traditional
mooncakes,also an expert in Economics
CherryA seller of jelly
mooncakes
HAHA, jelly mooncakes are more popular now.
I am selling more mooncakes than you, so I am gaining more
profit than you!
Not necessarily…
Jelly Mooncakes
S1D1
P1
Q1
D2
P2
Q2
P($)
Q/t0
Jelly Mooncakes
S1D1
P1
Q1
D2
P2
Q2
The demand for jelly mooncakes increases. As shown in the diagram, the demand curve for jelly mooncakes shifts rightwards from D1 to D2. The equilibrium price for traditional mooncakes increases from P1 to P2, and the quantity transacted increases from Q1 to Q2.
The demand for jelly mooncakes increases. As shown in the diagram, the demand curve for jelly mooncakes shifts rightwards from D1 to D2. The equilibrium price for traditional mooncakes increases from P1 to P2, and the quantity transacted increases from Q1 to Q2.
P($)
Q/t0
Jelly Mooncakes
S1D1
P1
Q1
D2
P2
Q2
The demand for jelly mooncakes increases. As shown in the diagram, the demand curve for jelly mooncakes shifts rightwards from D1 to D2. The equilibrium price for traditional mooncakes increases from P1 to P2, and the quantity transacted increases from Q1 to Q2.
The demand for jelly mooncakes increases. As shown in the diagram, the demand curve for jelly mooncakes shifts rightwards from D1 to D2. The equilibrium price for traditional mooncakes increases from P1 to P2, and the quantity transacted increases from Q1 to Q2.
D1 increase to D2
Supply remains unchangedP1 increase to P2
Q1 increase to Q2
P($)
Q/t0
Traditional Mooncakes
S1
D2
P1
Q1
D1
Q2
P2
P($)
Q/t0
Traditional Mooncakes
S1
D2
P1
Q1
D1
Q2
P2
Since jelly mooncakes are substitutes for traditional mooncakes, people now buy fewer traditional mooncakes. There is a decrease in demand for traditional mooncakes. As shown in the diagram, the demand curve for traditional mooncakes shifts leftwards from D1 to D2. The equilibrium price for traditional mooncakes drops from P1 to P2, and the quantity transacted decreases from Q1 to Q2.
Since jelly mooncakes are substitutes for traditional mooncakes, people now buy fewer traditional mooncakes. There is a decrease in demand for traditional mooncakes. As shown in the diagram, the demand curve for traditional mooncakes shifts leftwards from D1 to D2. The equilibrium price for traditional mooncakes drops from P1 to P2, and the quantity transacted decreases from Q1 to Q2.
P($)
Q/t0
S1
D2
P1
Q1
D1
Q2
P2
Since jelly mooncakes are substitutes for traditional mooncakes, people now buy fewer traditional mooncakes. There is a decrease in demand for traditional mooncakes. As shown in the diagram, the demand curve for traditional mooncakes shifts leftwards from D1 to D2. The equilibrium price for traditional mooncakes drops from P1 to P2, and the quantity transacted decreases from Q1 to Q2.
Since jelly mooncakes are substitutes for traditional mooncakes, people now buy fewer traditional mooncakes. There is a decrease in demand for traditional mooncakes. As shown in the diagram, the demand curve for traditional mooncakes shifts leftwards from D1 to D2. The equilibrium price for traditional mooncakes drops from P1 to P2, and the quantity transacted decreases from Q1 to Q2.
D1 decrease to D2
Supply remains unchangedP1 decrease to P2
Q1 decrease to Q2
P($)
Q/t0
Traditional Mooncakes
HenryA seller of traditional
mooncakes,also an expert in Economics
CherryA seller of jelly
mooncakes
See? Both of price and quantity transacted of
jelly mooncakes increases while those
of traditional mooncakes decrease, and that means I earn
more than you!
However, I can lower the price of the
mooncakes to attract more buyers, so the quantity demanded
will increase according to the law
of demand.
HenryA seller of traditional
mooncakes,also an expert in Economics
However, I can lower the price of the
mooncakes to attract more buyers, so the quantity demanded
will increase according to the law
of demand.
Quantity DemandedThe amount of good or service consumers are willing to buy at a given price over a period of time, other things being constant.
Law of DemandA decrease in the price of a good will result in an increase in its quantity demanded over a period of time and other things being constant, or vice versa.
Traditional Mooncakes
P1
Qd1
D
P2
Qd2
Loss
Gain
P($)
Q/t0
Traditional Mooncakes
P1
Qd1
D
P2
Qd2
Loss
Gain
Traditional mooncakes have an elastic demand. As the price goes down from P1 to P2, the quantity demanded for traditional mooncakes will increase from Qd1 to Qd2. The percentage increase in quantity demanded is greater than the percentage decrease in price. The gain in the increase in quantity demanded is greater than the loss in decrease in price. Therefore, the total revenue of traditional mooncakes increase.
Traditional mooncakes have an elastic demand. As the price goes down from P1 to P2, the quantity demanded for traditional mooncakes will increase from Qd1 to Qd2. The percentage increase in quantity demanded is greater than the percentage decrease in price. The gain in the increase in quantity demanded is greater than the loss in decrease in price. Therefore, the total revenue of traditional mooncakes increase.
P($)
Q/t0
Traditional Mooncakes
P1
Qd1
D
P2
Qd2
Loss
Gain
Traditional mooncakes have an elastic demand. As the price goes down from P1 to P2, the quantity demanded for traditional mooncakes will increase from Qd1 to Qd2. The percentage increase in quantity demanded is greater than the percentage decrease in price. The gain in the increase in quantity demanded is greater than the loss in decrease in price. Therefore, the total revenue of traditional mooncakes increase.
Traditional mooncakes have an elastic demand. As the price goes down from P1 to P2, the quantity demanded for traditional mooncakes will increase from Qd1 to Qd2. The percentage increase in quantity demanded is greater than the percentage decrease in price. The gain in the increase in quantity demanded is greater than the loss in decrease in price. Therefore, the total revenue of traditional mooncakes increase.
P1 decrease to P2
Qd1 increase to Qd2
Increase in Qd > Decrease in PGain in Qd > Loss in PTotal revenue increases
P($)
Q/t0
HenryA seller of traditional
mooncakes,also an expert in Economics
CherryA seller of jelly
mooncakes
So how does it affect my total revenue?
So in this case, my total revenue increases
because I lowered the prices of my products.
And since we are in competitive demand, the demand for jelly mooncakes will fall.
Jelly Mooncakes
S1
D2
P1
Q1
D1
Q2
P2
Loss
P($)
Q/t0
Jelly Mooncakes
S1
D2
P1
Q1
D1
Q2
P2
Since the two products are in competitive demand, the increase in the quantity demanded of traditional mooncakes will lead to a decrease in the demand for jelly mooncakes. There will be a leftward shift in the demand curve from D1 to D2. Thus, there will be a decrease in the sales revenue of jelly mooncakes.
Since the two products are in competitive demand, the increase in the quantity demanded of traditional mooncakes will lead to a decrease in the demand for jelly mooncakes. There will be a leftward shift in the demand curve from D1 to D2. Thus, there will be a decrease in the sales revenue of jelly mooncakes.
P($)
Q/t0
Jelly Mooncakes
S1
D2
P1
Q1
D1
Q2
P2
Since the two products are in competition, the increase in the quantity demanded of traditional mooncakes will lead to a decrease in the demand for jelly mooncakes. There will be a leftward shift in the demand curve from D1 to D2. Thus, there will be a decrease in the sales revenue of jelly mooncakes.
Since the two products are in competition, the increase in the quantity demanded of traditional mooncakes will lead to a decrease in the demand for jelly mooncakes. There will be a leftward shift in the demand curve from D1 to D2. Thus, there will be a decrease in the sales revenue of jelly mooncakes.
Substitutes for each otherD1 decrease to D2
Supply remains unchangedP1 decrease to P2
Q1 decrease to Q2
Total revenue decreases
P($)
Q/t0
HenryA seller of traditional
mooncakes,also an expert in Economics
CherryA seller of jelly
mooncakes
Oh my! This is so confusing! So who is
earning more?
No worries, let me summarise all the ideas.
HenryA seller of traditional
mooncakes,also an expert in Economics
Since jelly mooncakes are becoming popular, demand for traditional mooncakes will decrease while the demand for jelly mooncakes increases. The price and quantity transacted of traditional mooncakes will decrease. Conversely, the price and quantity transacted of jelly mooncakes increases.
Conclusion
HenryA seller of traditional
mooncakes,also an expert in Economics
CherryA seller of jelly
mooncakes
I finally get it! Thanks Henry!
However, the traditional mooncakes suppliers may lower their to attract more customers to increase their sales revenue. Then the demand for jelly mooncakes will decrease, so is the sales revenue of jelly mooncakes. The total revenue of both kinds of mooncakes are constantly affecting each other. There are also many other factors influencing the revenues. Therefore, it is hard to tell who is gaining more profit.
References
• http://www.jetsoguide.com/mooncake/• SPCS economics notes