Write a report underpinned by the principles of economics applied to your agricultural commodity to clarify how the prices for this commodity are determined.
The report should highlight the nature of market forces impacting the agricultural commodity and the price determination results from these forces.
The research needs to be explained on the basis of the economic theory/principles you have studied.
In your report, you need to use data and refer to relevant reports/literature.
1. Collect nominal prices data since 2000 to the most recent data available from the relevant source(s). Use a table to show the annual price data. Plot, nominal prices data, using Microsoft Excel spreadsheet. Plot the prices (y-axis) against time (years) (x-axis) since the year 2000.
2. Describe the nominal trend in the graph
3. Research and explain the supply and demand factors that impacted the nominal price, by picking one major peak and one major trough in your nominal price graph.
4. Use theoretical graphs linked to your research to clearly demonstrate how the demand and/or supply curve shifted for your chosen commodity at major:
• Nominal price peak (place these relevant graph(s) after the research part) and
• Nominal price trough (place these relevant graph(s) after the research part)
Take the following three steps to analyse changes in equilibrium market price.
i. Decide whether the event shifts the supply or demand curve (or perhaps both).
ii. Decide in which direction the curve shifts.
iii. Use the supply-and-demand diagram to show how the shift changes the equilibrium price.
5. Plot a linear trend line through your graph. Forecast the price for the next 3 years and explain this trend.