Demand and Supply of resources in Australia - Myassignmenthelp.Com

Question: Discuss about the Demand and Supply of resources in Australia. Answer: Introduction: According to the economic concepts the demand for any commodity can be defined as the value of that particular commodity that is desired by the consumer. Supply on the other hand can be defined as the value of particular commodity which is offered by the labourers, producers, buyers etc. in the market (Becker 2016). The volume of quantity that is demanded regarding the price will be considered as the total demand of customers in view of the price. The quantity of goods and services that the producers are readily willing to sell in the market at the certain level of price and time is viewed as quantity that is supplied. According to the law of demand the association among the quantity demanded and price with all other things remaining constant represents that the increasing price of commodity there results in fall in quantity demanded. According to the law of supply it is understood that whenever a rise in price of commodity takes place there is a rise in the supply of quantity. Equilibrium in market is attained where the market forces of demand and supply is constant with other things remaining constant (Bewley 2017). The major demand factors are the commodity prices, taste and consumer preference and income of the consumer. The key factors of supply is reliant on the speculations with future anticipations of the price level of the products that are in question and the cost related with the production factors. The demand-supply, movement and shift of curves: As evident that there is a negative relationship between the quantity demanded and price. Additionally, there is a positive relationship among the supply of commodity and price that is put under question. If it is found that the price the product changes then there lead to the movement along the demand curve however if it is found that there is a change in the determination of demand apart from price of the particular commodity such as income, taste and preference then there is a shift in the demand curve. Citing an example, on noticing that given there is a rise in the earnings the demand curve will shift towards the right (Case et al., 2015). On the other hand, considering the situation of supply, if there is an increase or decline in the price simultaneously there will be a movement in the supply curve. Conversely, an increase or decline in the demand factors then there would be right or leftward shift of the supply curve. Similarly, in the case of supply, rise or fall in the level of price for the commodity would result in movement along the supply curve whereas the rise or fall in the factors apart from price would result in rightward or leftward shift in the supply curve. Figure 1: Figure representing change in quantity demanded (Source: Gans et al. 2014) Figure 2: Figure representing quantity supplied (Source: Greenlaw 2014) The figure that is given provides the detail that with the as the price of the goods shifts from p1 to p2 then there will be the change in the demand of quantity from x1 to x2. Similarly, evidences from the figure 2 provides that increase in price of goods from price 2 to price 1 there results a rise in the supply of quantity from quantity1 to quantity 2. The analysis of demand and supply of resources in Australia: According to Mankiw and Scarth (2014), the Australian present economic conditions has represented an economic fall and the economic slump is getting stickier with the passage of time. This is because economic fall is particularly due to the relationship with the nations that are leading business partner of Australia such as china and the product that are regarded as the Australias largest export namely the iron ore. The evidences has provided that the steel demand in china recently fell down. As a result of this there has been a slower export of Australian iron ore to China. Earlier, the Australian economy gained heights because the demand for iron ore sored high demand for the iron ore goods in China (Negishi 2014). In the latest report published by the world bank provides an influence on the inappropriate expansion of the Chinese economy may result an important influence on the exporters that are exporting their product to China and Australia has direct relations with the supply chain of China. According to Parkin (2014), lower price of iron ore would lead in fall in the revenues of $30 billion in the subsequent four years. Since the government has been able to pass the first budget in the year 2015 the prices of the iron ore has declined to $95/tonne of late and have gone into halves. The reason behind Australias economic growth for the last 23 years was because of the fact that the nations mining segment performed significantly. Because of the falling investment in the industry it has resulted the growth to fall by 0.5% in the last quarter of the year 2014. According to the governor of the central bank the growth in the iron sector is lower than the trend level (Vali 2016). Supposedly, the declining demand of steel is considered to be the exogenous issue that has resulted in the shift in the demand curve of iron ore to the leftward side (Rosefielde and Pfouts 2014). It should be noted that it is not the prices of the products that have directly caused the demand curve to increase or decrease however the shock of negative demand has created an influence on the entire demand curve to shift to the leftward side. Figure 3: Figure representing the demand of Iron Ore in Australia (Source: Smith and Smith 2016) The above stated figure represents that the falling demand of iron ore in Australia is because of the slower growth of economy in china has led the iron ore price to fall (Tuerck 2015). From the evidences of declining demand for steel in China, consequently the demand curve for the Australian iron is seen to have shifted towards the leftward side demand curve D to the Demand curve D2. Conclusively, there is a shift in the market equilibrium from point E1 to point E2 resulting a fall in the price from Price2 to Price1 and then there is a fall in the quantity from Quantity2 to Quantity1. Conclusion: The analysis concludes that the demand and supply of mining segment is not reliant on the price but it is also depending upon factors such as demand and supply shocks, consumer income and preference. As a result of this both the demand and supply of goods changes leading to the shift in market equilibrium. Reference Becker, G. (2016). Economic theory. New Brunswick, NJ: Aldine Transaction. Bewley, T. (2017).General equilibrium, overlapping generations models, and optimal growth theory. Cambridge, Mass.: Harvard University Press. Case, K., Fair, R. and Oster, S. (n.d.). (2015)Principles of economics. Gans, J., King, S., Stonecash, R., Libich, J. and Mankiw, N. (n.d.). (2014)Principles of economics. Greenlaw, S., Taylor, T., Dodge, E., Gamez, C., Jauregui, A., Keenan, D., MacDonald, D., Moledina, A., Richardson, C., Shapiro, D. and Sonenshine, R. (n.d.). (2015)Principles of macroeconomics. Mankiw, N. and Scarth, W. (n.d.).(2014) Macroeconomics. Negishi, T. (2014).History of Economic Theory. Burlington: Elsevier Science. Parkin, M. (2014).Macroeconomics. Boston: Pearson. Rosefielde, S. and Pfouts, R. (n.d.). (2014)Inclusive economic theory. Smith, D. and Smith, C. (n.d.). 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