Group Members : Bilal Javed ,

Rabia Javed , Alisha Khan , Isra

Saleem ,
Saad ur
Rehman.
BBA Section : ( 1-H )
Subject : Economics
Assignment : Case Study
Sumbmitted To : Mam Aliya
Batoool
 Brazil nut prices rises – A case study of
demand and supply

Q1. Explain the specific supply conditions that have affected the price of Brazil nuts in 2017.

Ans. The acute reason that have affected the price of Brazil nuts in 2017 is, There has
been a very poor harvest of Brazil nuts. The nuts are grown largely in the Amazon basin
which has been hit by drought linked to the El Niño effect. This, however, is only a
temporary effect and future harvests should increase again as rainfall returns to normal.
However, in the longer term, rainfall patterns may change with the effects of global
warming.

Q2. Why did prices rise ahead of the change in supply?

Ans. The price rise ahead of the Brazil nuts because of the demand side. Because the
consumption of Brazil nuts has increased as more people switch to healthier diets. This
includes the purchase of the nuts themselves and as part of healthier snack foods. With
supply being relatively inelastic, any rise in demand tends to have a relatively large
effect on price.

Q3. List down the factors that affected supply and demand for Brazil nuts.

Ans. The factors that affected supply and demand for Brazil nuts are:
1.The very poor harvest of brazil nuts.
2. The consumption of Brazil nuts has increased as more people switch to healthier
diets.
3. Global warming effect the supply.
4. Our economy improved their income.

Q4. Show the effect of all the factors individually, on equilibrium price and quantity

Ans. The effect of all the factors individually, on equilibrium price and quantity are:
1.The price rise has been on the demand side because the consumption of Brazil nuts
has increased as more people switch to healthier diets. This includes the purchase of
the nuts themselves and as part of healthier snack foods. , any rise in demand tends to
have a relatively large effect on price.
2. There has been a very poor harvest of Brazil nuts because of less rainfall. The nuts
are grown largely in the Amazon basin which has been hit by drought linked to the El
Niño effect. This, however, is only a temporary effect and future harvests should
increase again as rainfall returns to normal. However, in the longer term, rainfall
patterns may change with the effects of global warming.

0
2016 2017

PRICE QUANTITY DEMAND PROFIT & INCOME

Q5. In your opinion, what is their combined effect?

Ans. if Amazon basin have better rainfall which has great effect on the harvest &
production of brazil nuts then the economy increase , if  the harvest  & production of
brazil nuts  decrease because of low rainfall or any reason then the economy decrease.

Q6. How will better harvest next year affect the new equilibrium?

Ans. The better harvest affect the new equilibrium because may this year had risen over
60% on European markets. Because the demand of brazil nut increase as more people
switch to healthier diet so the price had also rise and due to rising in price, the next year
will affect the new equilibrium & may the better harvest increase the production & 
purchase of brazil nuts. The following graph shows the effect of harvest in new
equilibrium.

FROM JUNE 2017

SINCE MAY 2016

0 1 2 3 4 5 6

PROFIT &INCOME DEMAND PRICE PRODUCTION OF NUTS

This shows that if production of nuts increasing then profit, demand also increases.