Ensure that the presentation you create is your own authentic work. Adhere to APA Style when creating citations and references for this assignment. APA formatting, however, is not necessary.
Running Head: FOCUSING ON DEMAND 1
FOCUSING ON DEMAND 4
Focusing on Demand
Focusing on Demand
A movement along demand and supply is the changes in the curve. On the demand curve, the movement is an indication of variation in the price and quantity of the demand from one point to another (Razae et al., 2015). It occurs when the levels of the demanded quantity and prices fluctuate. Movement along the supply curve occurs when the goods and their quantities change from the original supply. It is mostly caused by price fluctuations.
A shift in the demand curve is a scenario that is experienced when the entire demand curve moves either to the left or right (Carvalho & Schiozer, 2014). For example, an increase in household income can translate to a rise in the demand for real estate ceteris paribus. A variation in the quantity of supply causes a shift in the supply curve. An increased supply shifts the curve to the right and vice versa. For example, an increase in the production of a product will cut its supply in the market, making the curve to shift to the left.
An equilibrium position is found when the quantity of a good supplied in the market matches its quantity demanded (Razae et al., 2015). At this position, the demand and supply curves cross. In a situation where the price is below the point of intersection, the amount of the required product will surpass its supply.
The level of equilibrium rises when the demand curve moves rightwards. The market will have a shortage of a specific good. When the supply curve moves outward, the equilibrium will decrease due to excess supply.
Products in the Industry
The selected industry for the study is food and beverage. The chosen product is Diet Pepsi. A few months after COVID-19 outbreak, the supply for this product shifted inwards with the demand moving rightwards, which created a state of disequilibrium in the global market (Edwards, 2020). This problem has been contributed by the disruption of Pepsi’s global supply chain for ingredients and also the aluminum that is used in packaging the Diet Pepsi.
The COVID-19 pandemic has moved the supply curve for the Diet Pepsi. Natural disaster and crisis disrupt the production of good and service by disrupting the supply chain (Buechner, 2018). After the outbreak, a majority of markets were locked down to contain the spread of the virus. The shift has also been caused by an increase in the cost of production. The shortage of supplies like ingredients and packaging material implies that the available ones are expensive for the company to purchase in large quantities. When the price of inputs for production increases, firms record high cost of production. The process of producing goods becomes less profitable, which results in a reduction in the quantity of supply.
The increase in the number of potential buyers has shifted the demand for Diet Pepsi. When different nations imposed lockdown, many people spend more time at home. The demand for canned and bottled beverages Diet Pepsi inclusive has increased, which is not matched by the supply of this product. New consumers in the market buy a good at the same price, which results in a rightward shift of the demand curve.
A demand curve demonstrates how much of a good the consumers are willing to purchase at a specific price. The supply curve is an indication of the quantity of a good the suppliers avail in the market at a particular price. A balance between the two elements creates a state of equilibrium in the market.
Buechner, N. M. (2018). A comment on the law of supply and demand. The Journal of Philosophical Economics, vol. 11(2):67-80. Retrieved from https://ideas.repec.org/a/bus/jphile/v11y2018i2n4.html
Carvalho, J. C & Schiozer, F. R. (2014). Determinants of supply and demand for trade credit by micro, small and medium-sized enterprises. Retrieved from https://www.scielo.br/pdf/rcf/v26n68/1519-7077-rcf-201500940.pdf
Edwards, J. (2020). Where’s all the diet soda? And other thought on the pandemic. The Daily Sentinel. Retrieved from https://www.dailysentinel.com/coronavirus/article_ed9772cf-49a8-58af-ab3b-ed26921e6212.html
Razae A. S, Oey, M, Nevejan, C & Brazier, F. (2015). Participatory demand-supply systems. Science Direct, 44(2015): 105-14. Retrieved from https://pdf.sciencedirectassets.com/280203/1-s2.0-S1877050915X00032/1-s2.0-S1877050915003014/main.pdf?X-Amz-Security-