Amazing and Interesting

Amazing and Interesting

 CHARLESTON: In a small laboratory on an upper floor of the basic science building at the Medical University of South Carolina, Vladimir Mironov, M.D., Ph.D., has been working for a decade to grow meat.

A developmental biologist and tissue engineer, Dr. Mironov, 56, is one of only a few scientists worldwide involved in bioengineering "cultured" meat.

It's a product he believes could help solve future global food crises resulting from shrinking amounts of land available for growing meat the old-fashioned way ... on the hoof.

Growth of "in-vitro" or cultured meat is also under way in the Netherlands, Mironov said in an interview, but in the United States, it is science in search of funding and demand.

The new National Institute of Food and Agriculture, part of the U.S. Food and Drug Administration, won't fund it, the National Institutes of Health won't fund it, and the National Aeronautics and Space Administration funded it only briefly, Mironov said.

"It's classic disruptive technology," Mironov said. "Bringing any new technology on the market, average, costs $1 billion. We don't even have $1 million."

Director of the Advanced Tissue Biofabrication Center in the Department of Regenerative Medicine and Cell Biology at the medical university, Mironov now primarily conducts research on tissue engineering, or growing, of human organs.

"There's a yuck factor when people find out meat is grown in a lab. They don't like to associate technology with food," said Nicholas Genovese, 32, a visiting scholar in cancer cell biology working under a People for the Ethical Treatment of Animals three-year grant to run Dr. Mironov's meat-growing lab.

"But there are a lot of products that we eat today that are considered natural that are produced in a similar manner," Genovese said.

"There's yogurt, which is cultured yeast. You have wine production and beer production. These were not produced in laboratories. Society has accepted these products."

If wine is produced in winery, beer in a brewery and bread in a bakery, where are you going to grow cultured meat?

In a "carnery," if Mironov has his way. That is the name he has given future production facilities.

He envisions football field-sized buildings filled with large bioreactors, or bioreactors the size of a coffee machine in grocery stores, to manufacture what he calls "charlem" -- "Charleston engineered meat."

"It will be functional, natural, designed food," Mironov said. "How do you want it to taste? You want a little bit of fat, you want pork, you want lamb? We design exactly what you want. We can design texture.

"I believe we can do it without genes. But there is no evidence that if you add genes the quality of food will somehow suffer. Genetically modified food is already normal practice and nobody dies."

Dr. Mironov has taken myoblasts -- embryonic cells that develop into muscle tissue -- from turkey and bathed them in a nutrient bath of bovine serum on a scaffold made of chitosan (a common polymer found in nature) to grow animal skeletal muscle tissue. But how do you get that juicy, meaty quality?

Genovese said scientists want to add fat. And adding a vascular system so that interior cells can receive oxygen will enable the growth of steak, say, instead of just thin strips of muscle tissue.

Cultured meat could eventually become cheaper than what Genovese called the heavily subsidized production of farm meat, he said, and if the public accepts cultured meat, the future holds benefits.

"Thirty percent of the earth's land surface area is associated with producing animal protein on farms," Genovese said.

"Animals require between 3 and 8 pounds of nutrient to make 1 pound of meat. It's fairly inefficient. Animals consume food and produce waste. Cultured meat doesn't have a digestive system.

"Further out, if we have interplanetary exploration, people will need to produce food in space and you can't take a cow with you.

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TV commercials: Inform, remind and persuade!

When do people sing and dance while eating biscuits?

While I was watching the news the other night, a newscaster said, “Stay tuned, we’ll be right back after a short commercial break,” making me immediately think, “Oh god! Not again.” The musical rollercoaster of advertisements began – a five minute ride that I seriously did not enjoy.

What I learnt in my O-level commerce class was that there are three categories of advertisements – ‘reminder advertisement’ that reminds consumers of the productsavailable in the market; ‘informative advertisement’ that keeps the consumer informed and ‘persuasive advertisement’ which persuades consumers through various techniques to buy the product. And these apply to advertisements on special offers such as “buy one, get one free”.

But what I fail to understand is how a tea whitener can be sold by overweight Lollywood actresses in fancy lehngas and cholis, and actors dressed in what could give the actresses a run for their money.

Other examples include television commercials for a brand of biscuits, in which a group of people are singing and dancing at a party while eating biscuits. I have never in my life seen people do that!

Another one for a mobile network makes me wonder what connection it has with two ladies elegantly dancing the kathak to a Bollywood song with a parade of coordinated background dancers.

So, when the medley of badly composed and annoying jingles was over, I found it rather disturbing that the tunes were still playing in my head.

This is when I thought of the “5 Ws and 1 H” of journalism. Who, what, where, when, why and how are leading advertisement agencies getting away with this?

Even if they manage to sell their ideas to companies, they are clearly not getting their message across to the masses who fail to understand the connection between the jingles and the product. So through all the singing and dancing, what exactly are they informing, reminding and persuading the consumers to buy?

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Whose country is this anyways? (Part III)

Corruption explains government failure and greed.

Corruption is the one word that explains government failure, greed, misallocation of public resources, abuse of power and undeserving state patronage.

However, depending on who is involved, the degree of condemnation varies, which is a curious anomaly in what should be outright condemnation and a clear recognition of right from wrong.

A dog’s life

Recent reports have suggested that Pakistan’s Defence Ministry is demanding Rs1.66 billion to establish a National Canine Centre to train dogs.  3,260 dogs are to be trained over a period of 10 years, which works out to Rs2.7 million per dog. The army already manages a well regarded dog-training centre in Westridge, Rawalpindi, therefore the need for such an allocation is questionable at a time when the PSDP is being cut to a depressing Rs100 billion for the current year.

Even so, the utility of such a project cannot be denied, and neither can the necessity. Dogs play a valuable role in security, sniffing out drugs and explosives and rescue operations What can be criticised is how the outlay of expenses is presented and justified. Within the project, the need for 15 brand new land cruisers is in poor taste. If the public is to finance such a project, those who demand resources should at the very least, make efforts to keeps expenses to the minimum.

A man and the people’s castle

Moving from canines to humans, a Mr Yusuf reportedly sought and received permission to hold his son’s nikkah at the Lahore Fort, which also happens to be a World Heritage Site. In the process of hosting the wedding function the state shunned Pakistan’s responsibility to international agreements and domestic legislation. Further, the law regulating the provision of one-dish servings was broken at an event attended by legislators themselves, and the police at the people’s expense provided high security for the benefit of the noteworthy guests.

In a country, where many people depend on loan sharks to raise dowry and wedding expenses for their children, such cases of state-sanctioned opulence can diplomatically be described as disgusting.

A train to nowhere

Pakistan Railways recently announced that average fares would rise by 30 per cent. As poor people consume a higher proportion of rail services, they will bear the brunt of the steep fare increase.

Why does PR have to raise fares? Well reportedly, it is trying to avert bankruptcy. But why is it nearing bankruptcy? Because the state and those who have been appointed to head the organisation have literally run it aground.

Such appointees include the former Mister for Railways, Lt General Javed Ashraf Qazi, former Secretary and Chairman Railways Lt General Saeeduz Zafar, ex-General Manager Railways Hamid Hassan Butt and former Secretary Railways Khursheed Alam Khan. They have contributed to the lease of Railways Land to Royal Palm Golf and Country Club at nominal rates. This period also saw the purchase of Chinese railway carriages that were later found to be unfit for use.

Rail commuters will be happy to know that the former heads of PR are apparently going to get away with not even a slap on their wrists. The former Railways Minster, now Senator, Lt General Javed Ashraf Qazi enjoys the best of both worlds. He is a member of the PML-Q which has brought pressure on the sitting government to drop investigations, and as a sitting Senator and Lt General, is beyond the reach of any form of accountability. I do hope to be proven wrong and that my cynicism unwarranted, but when was the last time you heard of a sitting Senator/Lt General held to account?

Take aim…fire

As if it wasn’t bad enough that entourages of Arab royals are crisscrossing the country hunting an endangered species, Sindh Assembly Speaker Nisar Khuhro and MPAs Taimur Talpur and Sharjil Inam Memon under the patronage of police and local waderas, indulged in a spot of deer hunting. Endangered deer, of course, otherwise where would the fun be?

As local villagers attempted to contact the local police and gaming officials; their cell phones were conveniently not responding. When they attempted to challenge the hunting party, they received the obligatory threat of having to face “dire consequences”. It’s quite obvious which side broke the law and got away with it.

A man and his country

There are probably a few people in Pakistan like Malik Riaz, chairman of Bahria Town. In the aftermath of the death of five spectators on one of his housing estates, the chairman received the President of Pakistan at his residence in the middle of the night, accepted apologies from high ranking police officers for having the audacity to attempt to investigate a crime, and insured that his son with a police escort was ushered through Benazir Bhutto International Airport to make his way to Dubai.

If doling out property to government functionaries was not enough to insure the compliance of the state, Bahria Town has also established a partnership with the cash strapped Defence Housing Authority Islamabad.

The honourable Chairman proudly claimed that his wealth added up to $2 billion in an interview with Richard Quest on CNN, yet according to a statement made by the Chief Justice, he does not pay any taxes. He is the man behind the infamous “Rehmani Hajj” where journalists and members of the interior ministry sought forgiveness at the house of God for their sins.

The unholy spectrum

The loot and plunder of individuals and organisations of the public purse is well known. The excuses that are offered to justify such actions are unique. Attach Zardari to any suggestion of financial impropriety and from the religious right to the liberal left, everyone in unison screams corruption. Politicians and corruption: disgusting? Yes. Surprising? No.

Come closer to home, and it’s not that obvious anymore. So many individuals have come out in support of Bahria Town in the wake of the death of spectators in last year’s car race, while many individuals idolise Malik Riaz’s success, where land grabbing and alleged bribery is explained away as part of doing business in Pakistan.

The misallocation of state resources in relations to private members club, as in the case of the Royal Palm Golf and Country Club or indeed even the Islamabad Club hardly raises any condemnation. Is it because we are members of such institutions, or know people who are or aspire to be one, one day?

Any project titled with the word “strategic”, presented by the military is above any transparency or accountability. The defence of the state is contingent upon the purchase of brand new land cruisers many would argue.

Accusations of corruption reflect our own biases. Our collective silence or acceptance of many cases of waste and misallocation of public resources has created a spectrum moving from unacceptable to socially acceptable forms of corruption.

Those who pay for these excesses are those who look increasingly foolish paying their taxes and the tens of millions of Pakistani’s stuck in poverty. As the state borrows and prints money to pay for the waste of those in power, inflation rises, and the state compensates their allies with even more ill-gotten and undeserving patronage.

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Slackistan: Not coming to a cinema near you

The film follows a young group of friends in Islamabad

The Pakistani creative and entertainment industry is in the line of fire yet again. Last week’s cause célèbre is incidental heroine Veena Malik, the Lollywood actress whose participation in the Indian reality television show Bigg Boss, has touched a raw nerve with Pakistan’s self-appointed morality brigade (media and mullah alike). She emerged from Kamran Shahid’s show Frontline as an ambassador for showbiz and entertainment.

This week, we have been greeted with the news that Hammad Khan’s feature filmSlackistan with an all-Pakistani cast will not be released in Pakistan because of the raft of objections and censorship demands from the Pakistani Central Board of Film Censors. In all fairness if the director were to comply with the demands of the Central Board of Film Censors there would be nothing left of it.

I watched Slackistan when it premièred in London in early October 2010 as part of the Raindance Film Festival in London. By this time, Slackistan had been in the media spotlight for almost a year. The Guardian wrote:

“Indeed, the strap line for the film is: ‘Think you know Pakistan. Think again’. While it sounds like it ought to be part of a tourist campaign, it points to a country that is rarely explored in modern cinema, TV or literature.”

The BBC Asian Network (Radio) said that Slackistan has a cult following online. With all this hype it was impossible not to go and see the film.

What the film is about

Drawing his inspiration from American director and producer Richard Linklater’s 1991 debut Slacker, Slackistan is about the universality of growing up and defining oneself. In it Khan’s characters go from being ‘stuck in the waiting room of life’ to becoming (or in some cases remaining) slackers. But the film’s real creative potential lies in capturing the socioeconomic and political circumstances of the city of Islamabad.

This is done through dialogue and location. In their conversations, the characters reveal their fascination with the ‘McDonalds’ culture: brands and symbolisms. They love burgers, western fashion, branded material, dancing, drinking and partying. But equally the film demonstrates the paradoxes with which the characters coexist, such as the easy mistrust between the have and have-nots or a visit to the French colony, which brings relief as to how the city is compartmentalised so that its elite can have their essential home-help, gardening and cleaning services living nearby. Then there is the omnipresent threat of religious extremism and terrorism, which the characters in the film laugh and joke about because perhaps that is the only way to come to terms with the uncertainty of violence that has become a salient feature of Pakistani life.

Why it cannot be censored

If the director were to do away with all references to the Taliban, Osama bin Laden and any inferences to beards and religious attire, edit out any bad language, references to sexual orientation or remove the partying and the alcohol (as the censor board would prefer), the soul of the film would be lost along with a creative representation of the lives of our young slacker elite. Even if the director complied, Slackistan would be subject to an 18+ classification, virtually excluding its younger audience.

Hammad Khan is right to point out that:

“Apart from being an undemocratic restriction on the filmmaker’s right of expression, the verdict shows the disdain with which the authorities regard local film culture and liberal ideas, in the face of growing extremism and intolerance. The censor board’s verdict is oppressive, arbitrary and steeped in denial about life outside their government offices. Maybe the establishment’s view is that young Pakistanis saying words like ‘Taliban’ and ‘lesbian’ represent a more potent threat than the bullets and bombs that are, day by day, finding increasing legitimacy in the country.”

Pakistan’s got talent – you just can’t see it

This is not the first time the Central Board of Film Censors has failed to support local talent and film. Last year, Tere Bin Laden fell foul because it was said to contain objectionable content that could spark controversy. I watched the film when I was in Islamabad in December and found it not just refreshing but an almost satirical comedy. It made me laugh much but also touched upon how terrorism and stereotypes have come to affect us today.

Thwarting the release of Slackistan is not merely about holding back entertainment, it is about the lack of pride in local talent which has gone on to enjoy the international spotlight. It impedes the young musicians who worked on its soundtrack and negates a fair representation of the diversity within Pakistan. We often accuse those who constrict creative expression and diversity of belonging to the extremist or intolerant camp. Personally, I think it is about fear. It is about being afraid of challenging what is perceived to be the voice of the majority. What made Veena Malik an incidental heroineis that as a solo voice. She stood her ground as a professional actress and entertainer. The almost frenzied posting of status updates and articles celebrating her are a testament to her courage.

Offended by art but not by brutality

The need for balanced regulation has never been greater. Its principles must be responsibly defined, guarding freedom of speech as well as ethical boundaries. Our television media today stands only for graphic visualisation of violence, rash news reporting, hate mongering. Why not impose the same standards of governance there? Why will not our censorship boards object to third-rate journalism that falls so far foul of humanity? A universal understanding of ethics should be the benchmark in censorship. There is nothing in Slackistan or Tere bin Laden that is offensive. Slackistan is a very real caricature of a part of Pakistan’s population, albeit elitist, while Tere bin Ladenattempts to take a light-hearted view at an otherwise serious issue. Both films are creative, fictional and good illustrations of how the film industry in Pakistan is maturing. We ought to credit them with their artistic due or forever be banished in Zia’s Pakistan.

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UNIT 1

THE MARKET FORCES

 

LAW OF DEMAND

 

Q #1 What is demand? Explain the law of demand.

 

Ans:

In economics the term demand has a special meaning. It can be defined in the following words:

"Amount of a commodity or service which buyers are willing and able to buy at a given price during a given period of time."

This definition shows that all desires are not demand. A desire becomes effective only when the consumer has the purchasing power to buy a particular commodity or service at some given price. Hence demand is always with reference to a particular price as well as to a given time period, may be a day, week or a month. It is clear that consumer's ability to pay and willingness to buy a commodity will be different at different price levels and over different time period. Therefore demand changes with time and changes in price.

 

LAW OF DEMAND

The law of demand states a relationship between price and quantity demanded. It can be defined in the following words;

"Other things being equal the quantity demanded of a commodity extends with a fall in its price and contracts with a rise in its price."

In other words the quantity demanded of a commodity changes inversely with its price. The law of demand establishes a definite inverse relationship between the price and quantity demanded of a commodity. Mathematically it is written as Qd = f (P)

Where Qd means quantity demanded and P is the price of a commodity.

The law can be explained by using following table.    

Table P  Q  1  10  2  8  3  6  4  4  5  2

In this table relationship between price of a commodity and its price is established. The table shows that when price is Rs. 1, quantity demanded is 10 units, and when price increased to 5 the quantity quantity demanded decreased to 2 units, thus the table shows that quantity demanded of a commodity changes inversely with its price.

The law of demand can also be explained with the help of following diagram.

In this diagram, price is taken on Y- axis and quantity demanded is measured on X-axis. By combining different combinations of price and quantity demanded we get a demand curve "DD" that slopes downward from left to right.

It shows an inverse relationship between price and quantity demanded of a commodity. Thus the normal slope of a demand curve is negative which explains relationship between price of a commodity and its quantity demanded

In the law of demand the term "other things being equal" is very important. It means all the factors except price which can cause a change in demand of a commodity. These factors are explained as assumptions of the law of demand. While explaining the law of demand we assume all these factors as constant.

 

ASSUMPTIONS:

Following are the important assumptions of law of demand.

 

1:    Income remains same

An increase or decrease in the income of consumer may cause a change in demand for a commodity at the same price. On the other hand demand of a commodity may remain unchanged after the change in price because of a change in income of consumer.

 

2:    Prices of related commodities

Changes in the prices of substitutes and complements also affect the demand of a commodity. For example the increase in price of Coke may lead to increase in the demand of Pepsi even though the price of Pepsi has not changed.

 

3:    Fashion and Taste

The demand of a commodity that becomes a part of fashion and becomes popular with the people may not fall with an increase in its price, therefore fashion and taste are considered to be constants.

 

4:    New Commodities

If new cheaper substitutes of a commodity become available in the market then the demand of the commodity may fall at the same constant price.

 

5.    Expectations

The future expectations for the prices of the commodity may affect the demand at present. For example if people expect an increase in the price of ghee they may increase demand of ghee at present prices.

 

6:     Population

An increase in population causes increase in the demand at the same prices therefore it is assumed that population remains constant.

Any other psychological and physical factors, other than price that may cause a change in demand is included in phrase "Other things." Any change in other things causes a shift in demand curve and therefore assumed as constant for the purpose of defining law of demand.

 

EXCEPTIONS:

A normal demand curve shows an inverse relationship between price and quantity demanded and it always slopes downwards from left to right. Any exception to this will be a demand curve which has a positive slope and shows a direct relationship between price and quantity demanded. This happens in the case of Giffen goods. These are a special type of inferior goods for which demand increases with increase in price and decreases with a decrease in price, so in this case demand curve slopes upward from left to right. This is shown in the following diagram.

Exceptional Demand Curve

 

 

An exceptional demand curve slopes upward and it shows increase in demand of a good due to increase in its price and vice versa.

CHANGES IN DEMAND

 

Q # 2    Distinguish between a "rise and fall " and an "extension and contraction" in

demand.

Ans:

Demand for a commodity may change due to two reasons

(1)    Changes in price     (2)    Changes in other things e.g. Income, taste, fashion etc. Economists use different terms to make a difference between these two types of changes in in demand.

 

(1)     Changes in demand due to changes in the price of the commodity

The changes in demand due to changes in price are called expansion or contraction in demand. These are explained as under

 

(i)     Expansion in demand

Increase in demand of a commodity due to decrease in its price is called expansion in demand. Expansion in demand is also called "Increase in quantity demanded"

 

(ii)    Contraction in demand

Decrease in demand of a commodity due to increase in its price is called contraction in demand. Contraction in demand is also called "Decrease in quantity demanded"

When changes in demand are related to price then this change of demand is on the same demand curve and are called movement on a demand curve.

The changes in demand due to price can be explained with following table and diagram

Table Px  Qx  1  10  2  8  3  6  4  4  5  2

The table relates changes in demand to changes in price. When price of the commodity is Rs.1, its demand is 10 units and price increased to Rs. 5 the demand for the commodity contracted to 2 units. On the other hand this table also shows that when price falls, demand for the commodity expands.

We can draw a diagram to explain these changes in demand due to change in price.

In this diagram DD is the demand curve which shows different quantities of demand against various prices. The negative slope of demand curve shows that quantity demanded of the commodity varies inversely with its price, and this change in demand is along the same demand curve. This is why it is called movement on the demand curve.

 

(2) Changes in demand due to changes in other things.

The changes in demand due to changes in other things are called rise or fall in demand. These are explained as under

 

(i)     Rise in demand

Increase in demand of a commodity due to changes in other things is called rise in demand. Rise in demand is also called "Increase in demand"

 

(ii)    Fall in demand

Decrease in demand of a commodity due to change in other things is called fall in demand. Fall in demand is also called "Decrease in demand"

When changes in demand are related to other things then these change of demand are not on the same demand curve but we get a different demand curve and are called shift of a demand curve.

The changes in demand due to change in other things can be explained with following table and diagram

 

Table P  Q  Q1  Q2  1  10  12  8  2  8  10  6  3  6  8  4  4  4  6  2  5  2  4  0

This table explains the Rise or Fall in demand due to change in other things. The column Q shows changes in demand due to change in price whereas the column Q1 shows Rise in demand because the demand for the commodity has increase against the same prices. The last column Q2 shows Fall in demand because the demand for the commodity has decreased against the same prices and this is due to some changes in other things.

We can draw a diagram to explain these changes in demand due to change in other things.

Diagram

This diagram explains that when demand of a commodity changes due to some change in other things, it causes shift of the demand curve. A rise in demand shifts the demand curve rightward and a fall in demand shifts the demand curve leftward. The factors due to which demand curve shifts leftward or rightward are called the shifts factors. These include income, fashion, taste, population etc. The demand curve D1D1 shows rise in demand and demand curve D2D2 shows fall in demand at the same prices.

 

 

SUPPLY AND LAW OF SUPPLY

 

Q #3 What is supply? Explain the law of supply.

 

Ans:

In economics the term supply has a special meaning. It can be defined in the following words

"Amount of a commodity or service which seller are willing and able to sell at a given price during a given period of time."

While discussing supply it is appropriate to differentiate between the concepts of "stock" and "supply".

Difference between supply and stock:

Supply means the quantity of a good which sellers are willing to sell at a given price and stock means quantity of a commodity which exists in the market but not offered for sale at some given price. Stock may or may not be equal to supply.

 

LAW OF SUPPLY

The law of supply states a relationship between price and quantity supplied. It states that

"Other things being equal the quantity supplied of a commodity extends with a rise in its price and contracts with a fall in its price."

In other words the quantity supplied changes directly with price. The law of supply explains a definite relationship between the price of a commodity and its quantity supplied. The law of supply can be explained with the help of following table.

Table P  Q  1  2  2  4  3  6  4  8  5  10

The table shows that when price is Rs. 1, quantity of supply is 2 and when price increased to 5 the quantity supplied increased to 10, thus the table shows that quantity supplied of a commodity changes directly with its price

The law of supply can also be explained with the help of following diagram.

In this diagram, price is taken on Y- axis and quantity supplied is measured on X-axis. SS is a supply curve that slopes upward from left to right. It shows a direct relationship between price and quantity supplied. Thus the normal slope of a supply curve is positive which explains relationship between price of a commodity and its quantity supplied In the law of supply the term "other things being equal" is very important. It means all the factors except price which can cause a change in supply of a commodity. These factors are explained as assumptions of the law of supply. While explaining the law of supply we assume all these factors as constant

.

 

ASSUMPTIONS:

Following are the important assumptions of law of supply.

 

1:    Prices of factors of production

If there is a change in the prices of the factors then supply of a commodity may change ate the same constant price. E.g. an increase in wages of labour may cause of decrease in supply of a commodity at the same price.

 

2:    Changes in technology

When better technology is available then it becomes possible to increase the supply of a commodity at the same constant price, because with improvement of technology the cost of production usually decreases.

 

3:    Changes in Weather

Supply of agricultural products usually changes with changes in weather. When weather is suitable for agriculture then more output is obtained and therefore supply of agricultural goods increase otherwise supply may decrease.

 

4:    Discovery of New natural resources

If new natural resources are discovered then supply of these products increases at the same price. e.g if new oil reserves are discovered then supply of oil will increase.

 

5:    Taxes

Production activities and supply of different goods very much depends upon the system of taxation. If heavy taxes are imposed on production of different goods then their supply may decrease. On the other hand concession in tax may help to increase supply at the same price.

 

 

 

CHANGES IN SUPPLY

 

Q #4     Distinguish between a "rise and fall " and an "extension and contraction" in Supply.

Ans:

Supply for a commodity may change due to following two reasons

 

(1)    Changes in price     

(2)    Changes in other things

Economists use different terms to make a difference between these two types of changes in supply. Following is the explanation of these two types of changes in supply.

 

1. CHANGES IN SUPPLY DUE TO CHANGES IN THE PRICE OF THE COMMODITY
   

 

The changes in supply due to changes in price are called expansion or contraction in supply. These are explained as under.

 

(i)     Expansion in supply

Increase in supply of a commodity due to increase in its price is called expansion in supply. Expansion in supply is also called "Increase in quantity supplied"

 

(ii)    Contraction in supply

Decrease in supply of a commodity due to decrease in its price is called contraction in supply. Contraction in supply is also called "Decrease in quantity supplied"

When changes in supply are related to price then these changes of supply are on the same supply curve and are called "movement on a supply curve".

The changes in supply due to price can be explained with following table and diagram.

 

Table Px  Qx  1  2  2  4  3  6  4  8  5  10

This table relates changes in supply to changes in price. When price of the commodity is Rs.1, its supply is 2 units and when price increased to Rs. 5 the supply for the commodity extended to 10 units. On the other hand this table also shows that when price of a good falls, its supply contracts and vice versa.

We can draw a diagram to explain these changes in supply due to change in price.

 

In this diagram SS is the supply curve which shows different quantities of supply against various prices. The positive slope of supply curve shows that quantity supplied of the commodity changes directly with its price, and this change in supply is along the same supply curve This is why it is called movement on the supply curve.

 

1. CHANGES IN SUPPLY DUE TO CHANGES IN OTHER THINGS
   

 

The changes in supply due to changes in other things are called rise or fall in supply. These are explained as under

 

(i)     Rise in supply

Increase in supply of a commodity due to changes in other things is called rise in supply. Rise in supply is also called "Increase in supply"

 

(ii)    Fall in supply

Decrease in supply of a commodity due to change in other things is called fall in supply. Fall in supply is also called "Decrease in supply"

When changes in supply are related to other things then these change of supply are not on the same supply curve but we get a different supply curve on the right or left side of the original supply curve therefore this is called shift of a supply curve.

The changes in supply due to change in other things can be explained with following table and diagram

 

Table P  Q  Q1  Q2 1  2  4  0  2  4  6  2  3  6  8  4  4  8  10  6  5  10  12  8

 

This table explains the Rise and Fall in supply due to change in other things. The column Q shows changes in supply due to change in price whereas the column Q1 shows Rise in supply because the supply for the commodity has increased against the same prices. The last column Q2 shows Fall in supply because the supply for the commodity has decreased against the same prices and this is due to some changes in other things.

We can draw a diagram to explain these changes in demand due to change in other things.

 

Diagram

 

In this diagram when price of the commodity is Rs. 3 the supply is 6 units, but when at the same price supply increased to 8 then we get a new supply curve S1S1 on the right side of the previous supply curve. Similarly when supply falls to 4 at the same price we get a new supply curve S2S2 on the left side of original supply curve SS. It is clear from the diagram that when supply of a commodity changes due to some change in other things, it causes a shift of the supply curve. A rise in supply shifts the supply curve rightward and a fall in supply shifts the supply curve leftward.

The factors due to which supply curve shifts leftward or rightward are called the shifts factors. These include technology, prices of factors, weather etc.

 

MARKET EQUILIBRIUM

 

Q #5 What is market price? How is it determined? Or Explain determination of market equilibrium.

Ans:

The equality of demand and supply operating together establish market equilibrium. A market means buyers and sellers of a commodity or service who can contact with one another. In competitive markets there are large number of buyers and sellers and no one can individually fix the market price of a product by deciding to buy or not to buy, sell or not to sell the commodity. In this case the price is determined by the interaction of demand and supply.

 

Definition of Market Equilibrium.

 

The equilibrium of market can be defined in the following words.

"Market is in equilibrium when quantity demanded of a commodity becomes equal to quantity supplied at some price."

Graphically the market equilibrium is determined at a point where demand curve of a commodity intersects its supply curve.

The relation of demand and price is explained as law of demand as given below.

" If other things do not change then quantity demanded of a commodity changes inversely with its price"

 

This is further explained in the following table and diagram

Table Price  Qd  1  10  2  8  3  6  4  4  5  2

The table shows that quantity demanded of a commodity changes inversely with its price. When price is 1, the quantity demanded is 10 and when price is Rs. 5, the Qd is decreased to 1 unit. In the diagram the demand curve slopes downward from left to right and it also shows that quantity demanded of a good changes inversely with price.

 

        The relation of supply and price is explained as law of supply as given below.

"If other things do not change then quantity supplied of a commodity changes directly with its price"

 

This is further explained in the following table and diagram

Table Price  Qs  1  2  2  4  3  6  4  8  5  10

 

The table shows that quantity supplied of a commodity changes directly with its price. When price is 1, the quantity supplied is 2 and when price is Rs. 5, the Qs is 10. In the diagram the supply curve slopes upward from left to right and it also shows that quantity supplied of a good changes directly with its price.

 

Explanation of Market Equilibrium

A market is in equilibrium when quantity demanded is equal to quantity supplied or market is in equilibrium at a point where demand curve of a commodity intersects its supply curve.

The equilibrium of market can be explained with the help of following table and diagram

 

Table

Price	Qd	Qs
1	10	2
2	8	4
3	6	6
4	4	8
5	2	10

The table shows that when price of the commodity increases its demand decreases, while the quantity supplied increases with increase in price and vice versa. The equilibrium price is Rs. 3 where demand of the commodity is exactly equal to supply and both are equal to 6.

Any price less than 3 shows that demand is more than supply and this results in increase in price and as a result changes in demand and supply.

On the other hand all prices more than 3 show more market supply than demand. In both the case price is not stable. Only at price 3, demand is equal to supply and there is no tendency of demand or price to change.

 

The equilibrium of market is further explained with the help of following diagram. This diagram is constructed with the help of above table.

 

Diagram

 

 

In the diagram equilibrium of the market takes place at point "E" where supply curve (SS) intersects demand curve (DD). Thus equilibrium price is determined at "3" and equilibrium quantity is "6". At any price more than equilibrium price there is excess supply in the market and for any price less than equilibrium price there is excess demand in the market. Both excess demand or excess supply create instability or changes in price, demand and supply. Only at point E market demand is equal to market supply showing the position of stability. Thus 6 is equilibrium quantity and 3 is equilibrium price.

 

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