Transcript Using individual peer assessment in economics teaching

Assignment part 1
Cocoa Beans
If you look at the link given
• Indexmundi (2010) Cocoa Bean Prices –
Monthly value
• http://www.indexmundi.com/commodities/?
commodity=cocoa-beans&months=60
• It gives a graph – but 2000 to 2010 – not
time period asked for
• The data below can be used to create a
graph in excel easily (see below)
Must
have and must be
Metric tonnes not value
- See question
Price
US $
Per
Metric
tonne
Cocoa Bean Prices –
January
2006 to September 2010
a)
Cocoa Bean Prices
4,000.00
3,500.00
3,000.00
2,500.00
2,000.00
Series1
Title – must
Have
AND
Date covered
correct
1,500.00
1,000.00
500.00
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
0.00
Source: Indexmundi (2010) Cocoa Bean Prices – Monthly value
http://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=60
Accessed 13 October
50 word blurb
• Something like
The diagram shows that with some minor
fluctuations (especially in 2008), cocoa prices
have risen steadily reaching a peak in January
2010 of $3522.10 per metric tonne. They now
appear to be on a downward trend, falling to
$2850.17 in September 2010.
(it would be nice to have the figures but not vital)
Producers of cocoa beans
• You were given the following link
• Information on Producers of cocoa
beans
• http://www.fao.org/es/ess/top/commodi
ty.html;isessionid=DA3839122F16FDE4
E66B7F3156E63DBE?lang=en&item=66
1&year=2005
title
b) Producers of Cocoa Beans 2005 MTonnes
Producers of Cocoa Beans 2005 Mtonnes
Source: FAO (2010)
http://www.fao.org/es/ess/top/commodity.html;isessionid=DA3839122F16FDE4E66B7F3156E63D
BE?lang=en&item=661&year=2005
Accessed 10 September 2010
28,500, 1%
32,000, 1%
17,000, 0%
33,423, 1%
11,000, 0%
42,500, 1%
48,405, 1%
55,298, 1%
137,178, 4%
8,500, 0%
8,000, 0%
5,630, 0%
5,650, 0%
5,000, 0%
180,000, 5%
213,774, 6%
1,330,000, 34%
366,000, 9%
610,000, 16%
Cote d'Ivoire
Cameroon
Malaysia
Togo
Ghana
Ecuador
Dominican Rep.
India
736,000, 19%
Indonesia
Colombia
Peru
Philippines
Nigeria
Mexico
Venezuela, Bolivar Rep of
Congo, Dem Rep of
Brazil
Papula New Guinea
Siera Leone
Solomon Islands
Source: FAO (2010)
http://www.fao.org/es/ess/top/commodity.html;isessionid=DA3839122F16FDE4E66B7F315
Accessed 10 September 2010
c) Share of main consuming countries 2004-5
Source: UNCTAD (2010)
http://www.unctad.org/infocomm/anglais/cocoa/market.htm
Accessed 10 September 2010
Consumers of cocoa
• This was given as
• http://www.unctad.org/infocomm/anglais/c
ocoa/market.htm
• The pie chart was already there.
d) 2 interesting points about the general market shown
above - Suggested good answers – need 2:
• i) Lesser Developed countries produce cocoa and More
Developed Countries consume it
• ii) Dominance of a few suppliers should give power
• iii) Dominance of USA and Europe gives consumer
power
e) 3 major factors affecting cocoa
price recently
1. Increased demand due to increased demand
for chocolate in rich countries
2. Reduced supply due to poor crops in west
Africa (especially Ivory Coast)
3. Increased demand from speculators –
especially Anthony Ward. Note this is a
demand factor at present – when he releases
the cocoa onto the market it will become
increased supply.
4 reasons – Demand and Supply
Cocoa PRICES
DEMAND
Increased demand
due to increased demand
for chocolate in rich countries
DEMAND
Increased demand
From speculators
Especially Anthony
Ward
Arrows show in which direction
This factor pushes price
SUPPLY
Reduced supply
Drought in Ivory
Coast
Assignment 1 part 2
Answers
Increased demand due to demand
for chocolate in rich countries
Supply
Price
Demand shifts right
Price rises to P2
Quantity rises to Q2
P2
P1
Demand 2
Demand 1
Quantity
Q1
Q2
Reduced supply due to poor crops
in West Africa
Supply 2
Supply 1
Price
Supply shifts left –
Price rises to P2
Quantity falls to Q2
P2
P1
Demand 1
Demand
Quantity
Q2 Q1
Increased speculation
Supply
Price
Demand shifts right
Price rises to P2
Quantity rises to Q2
P2
P1
Demand 2
Demand 1
Quantity
Q1
Q2
g) Demand Elasticity
• Demand is price INELASTIC DEMAND
– People love chocolate and are addicted.
Would need a massive increase in price to
stop buying it
– Low proportion of household income – so
higher price has little impact
h) Supply Elasticity
•
•
•
•
Short run – very price INELASTIC supply
Long run – more price ELASTIC supply
Why – in long run can plant more cocoa trees
Ivory Coast
– Short run - Poor crop due to rains spoiling and cannot
replant immediately
– Long run – could plant more but low investment in
cocoa industry
– Low prices of cocoa in past have lead to shift to other
products – so reduced long term price elasticity of
supply
Diagram
• Supply curve should be steep – inelastic in
short run
• Demand curve should be steep - inelastic
Diagram
Demand Curve shifts to D2 for
speculation
S2
Supply 1
P2
Demand Curve shifts to D3 for
More demand for chocolate
Supply curve shifts to S2
For poor crops
P1
Price rises a lot to P2
Quantity rises a bit to Q2
Demand 3
Demand 2
Q1
Demand 1
Q2
How much price rises
Depends on
a) Size of shifts
b) Elasticity of D & S
Re price
Finally
• Add up the marks on the front
• Highlight anything you are unsure about
• Give feedback
• When you get it back
• Comment in space marked if you disagree with
anything
• DO NOT CHANGE ANY MARKS DIRECTLY