Demand and Supply

Running head: DEMAND AND SUPPLY 1
Demand and supply
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DEMAND AND SUPPLY 2
The concept of demand and supply is imperative in determining the optimal price and
output for a particular product. In this essay, two articles will be analyzed to demonstrate the
application of demand and supply in real-world identifying how the concept of demand and
supply has been applied. The use of diagrams will be crucial to explaining how economic theory
is evident in the business world.
Literature review
According to classical economists, economic theory employs a model of demand and
supply that gives an elaboration of how the equilibrium of one commodity is realized
(Britannica, 2019). The mechanisms used in deriving equilibrium employ intersection between
demand and supply curves. Economics postulate that price is the primary determinant of both
demand and supply. Equilibrium economics only defines the interaction of the demand and
supply curves and fails to explain how the intersection is attained (Britannica, 2019). The system
dynamicists, on the other hand, are of the view that product availability, as opposed to
production rate, affects both the price and demand of the market. This translates to the inventory
of a commodity as a primary component in setting the price and controlling demand. Thus, both
theories present a hybrid of dynamic impacts of stock that repeats the static argument by
economists regarding demand and supply.
Article 1: Demand for organic still exceeds supply for many goods
In this article, the author expresses concerns regarding demand and supply of organic
product in Washington (Sterk, 2018). Based on the analysis as per this article, it is evident that
demand for organic products exceeds supply and this leads to higher prices that are paid for
organic components and finished goods compared to traditionally grown and processed
commodities. Thus, a majority of livestock and milk producers with the inclusion of processors

DEMAND AND SUPPLY 3
of food rely on imports for the provision of organic raw products and originality is often hard
and fallen into the hands of predators where fraud is reported in some cases.
According to Organic Trade Association(OTA) in the latest survey that was conducted it
indicated that sales from organic food recorded more than $45 billion at the end of 2017 which is
6% rise from the 2016 figures and exceeded the general growth of food sales that is set at 1.1%
(Sterk, 2018).However, the growth rate slowed down from the 9% recorded in 2016 due to the
slump growth in organic dairy and egg section, the O.T.A asserted. It has been reported that
globally, the sales from organic product went above $90 billion (Sterk, 2018). Natural products
have continued to venture in the total food market and currently accounts for more than 5% of
the food sold in some of the retail distributors in the United States of America.
The prices for organic food grade such as wheat, corn, and soya beans have been reported
to be more than three times higher than traditionally-grown crops. As of September, the organic
and non-genetic modified organisms trading avenue and market data company approximated that
regional average price in between July-August for commodities such as food-grade organic corn
retailed at $11 per bu, soya beans at $21 and hard red spring wheat for $15 (Sterk,
2018).However, in contrast, the prices for traditional-grown grains stood at $3 for Omaha corn
per bu, soya beans at $7 per bu and hard red spring wheat at $5 per bu based on the U.S.
agriculture department.
The high prices for organic commodities have promoted unethical, fraudulent activity
that is particularly problematic for imports. According to data provided by O.T.A the organic
imports from the U.S. were estimated to be worth $2.1 billion as of 2017 and was 25% up from
what was recorded in 2016 (Sterk, 2018). However, based on the investigations carried out last
year, it was found that imported products were fraudulently labeled as organic and challenges