Apple Market of United Kingdom

Running head: APPLE MARKET OF UNITED KINGDOM
APPLE MARKET OF UNITED KINGDOM
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APPLE MARKET OF UNITED KINGDOM
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Table of Contents
Answer 1..........................................................................................................................................2
Answer a......................................................................................................................................2
Answer b......................................................................................................................................3
Answer c......................................................................................................................................7
Answer 2..........................................................................................................................................9
Answer 3........................................................................................................................................11
Difference..................................................................................................................................11
Similarity...................................................................................................................................12
References......................................................................................................................................14

e
1
Q*
PRIC
E
P
*
Dn
q
Sn
q
QUANTIT
Y
APPLE MARKET OF UNITED KINGDOM
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Answer 1
Answer a
It is assumed that the apples market in United Kingdom (UK) is in equilibrium. The
market is described by the traditional demand curve and the supply curve. Supply of apples is
covered by a combination of the domestic apple production (UK-based suppliers) and foreign
apple production (non-UK-based-suppliers). The entire discussion about the equilibrium market
is done below along with a graphical representation as shown in figure1.
Figure 1: Apple Market Equilibrium
Source: Created by the Author
The above figure (figure1) depicts the equilibrium market for apples in UK. In the diagram,
number of apples (Quantity) is measured along the horizontal axis while the vertical axis
represents the Price of each apple. The demand for the apples in the market is shown by Dnq, the

APPLE MARKET OF UNITED KINGDOM
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demand curve of the UK apple market while the supply is presented by Snq, which is the supply
curve of apples. In economics, market equilibrium is described as a situation where economic
forces like market supply and market demand balance each other. Moreover, the equilibrium
value obtained by the intersection of economic variables does not change in absence of any
external influences (Azevedo and Leshno 2016). In this case of UK apple market, the market
supply curve (Snq) intersects the market demand curve (Dnq) at point e1. The point e1 is the
market equilibrium point because at this point Snq is equivalent to Dnq. The price and the
quantity which correspond to the point of equilibrium are referred to as the equilibrium price and
equilibrium quantity respectively. Hence, in the above diagram, the price and the quantity
corresponding to the equilibrium point e1 are P* and Q* respectively. Therefore P* and Q* are
the equilibrium price and quantity of the apple market of UK respectively.
Answer b
UK government wants to promote the domestic market for apples. For promoting the
domestic market, the government sets quota on apples imports. As a consequence of imposition
of quota, only half of the previously imported apples are permitted to be imported and sold onto
UK market. The three stages of the derivation of the supply curve are illustrated below which
include demonstration of UK-based supply curve, non-UK based supply curve before and after
imposition of quota and total supply curve of UK (SFUK)
i)
The UK government has imposed quota on the import of apples with an aim to increase
the domestic market, so the domestic supply market for apples will increase by the extent of