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Microeconomic Terms and Graph

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    the models and theories into the case study, based on the following concepts, demand and supply, substitutes, shortage, elasticity, price ceiling, consumer and producer surplus and tax. 3. 0 Analysis 3. 1Demand and Supply Demand refers to the quantity of a good or service that buyers are willing to uy, while supply refers to the total quantity of a good or service produced to be offered (Johnson, 2012). Increase in the price of 5kg bottle of premium brand cooking oil which is priced at RM16. 90 has raised the consumers concern, especially when the price has exceeded the recommended price ceiling of RM16. 15, and meanwhile, 1kg bottled cooking oil was sold at RM4. 20 instead of the usual price of RM4. 00 (rounded to 2 decimal place), and thus alerted the Ministry of Domestic Trade, cooperatives and Consumerism (MDTCC) (Boon, 2012).

    perception that due to the increment price in the cooking oil, the quantity demanded has decreased. Thus, there will be changes in the movement along the curve. The equilibrium market price is at RM4. 00 while the equilibrium market quantity demanded is at 95. When the price increases to RM4. 20, the quantity demanded will move from 95 to 90, where the quantity demanded has decreased. “Malaysian Palm Oil Board (MPOB) has increased supply of cooking oil to suppliers and wholesalers nationwide by 20 per cent for the fasting month and coming Hari Raya Aidilfitri celebrations” (Bernama, 2011).

    Especially during the festive season, suppliers will supply more than ample cooking oil to the consumers to avoid shortages. Quoted by Ismail Sabri Yaakob, “We hope this 20 per cent increase in supply will ensure there are no problems in obtaining cooking oil during the festive season” (Bernama, 2011). Thus, suppliers will supply more during the festive season. Supply curve will shift to right. When the price increases from RM4. 00 to RM4. 20, the quantity supplied will increase from 95 to 120 due to the expectation of the future price. New equilibrium price of RM3. 0 and equilibrium quantity of 105 is produced when both demand and supply models are combined. 3. 2 Substitute Unlike the broader specific brand like Neptune, Red Eagle and more, the cooking oil itself has no substitute, thus there would be no other alternatives recommended as other exceptions might be even more costly and consumers might somehow feel that it’s pointless to adapt them. 3. 3 Shortage Shortage

    oil supplied increased for festive season. ttp://www. theborneopost. com/2011/08/09/cooking-oil-supply-increased-for-festive-season/ (Accessed 27 January, 2013) Boon, Peter. 2012. Consumers complain cooking oil sold at higher than fixed price. http://www. theborneopost. com/2012/11/27/consumers-complain-cooking-oil-sold-at-higher-than-fixed-price/ (Accessed 20 January, 2013) Investopedia. 2013. Shortage. http://www. investopedia. com/terms/s/shortage. asp#axzz2JErdrnik (Accessed 26 January) Investopedia. 2013. Taxes. http://www. investopedia. com/terms/t/taxes. asp#axzz2JErdrnik (Accessed 27 January)

    Johnson, Matt. 2013. Economic Basics: Supply and Demand. http://www. sophia. org/economic-basics-supply-and-demand-tutorial (Accessed 26 January) Mofatt, Mike. 2013. Price Elasticity of Demand. http://economics. about. com/cs/micfrohelp/a/priceelasticity. htm (Accessed 26 January). Riley, George. 2012. Consumer and producer surplus. http://www. tutor2u. net/economics/revision-notes/a2-micro-consumer-producer-surplus. html (Accessed 26 January, 2013) Wisegeek. 2013. What is a price ceiling? http://www. wisegeek. com/what-is-a-price-ceiling. htm (Accessed 26 January)

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