Managerial Economics: Supply and Demand for Oliver's Grocery

This assignment delves into the managerial economics of Oliver's Grocery, focusing on the application of supply and demand principles. The student was tasked with creating two sets of supply and demand graphs, one representing a standard market and the other a local market scenario for Oliver's Grocery. The assignment required illustrating and explaining how a shift towards local sourcing impacts the supply and demand curves, considering factors such as resource utilization, production costs, and the overall economic impact within the local economy. The analysis highlights the potential benefits of local sourcing, including increased investment, reduced costs, and enhanced supply chain management, ultimately affecting price, quantity, and the overall economic equilibrium. The student also explained the reasoning behind the graphical representations, emphasizing the importance of understanding market dynamics and the factors influencing supply and demand in the context of Oliver's Grocery's operations.

1Running head: Managerial economics
Managerial economics
Name of student
Student ID
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2Running head: Managerial economics
Table of Contents
1. Draw two sets of supply and demand graphs for Oliver's Grocery. Label the first one
"standard" and label the second one "local." Illustrate how "going local" shifts supply,
demand, or both curves..............................................................................................................3
2. Explain the graphs..................................................................................................................5
Reference list..............................................................................................................................6

3Running head: Managerial economics
1. Draw two sets of supply and demand graphs for Oliver's Grocery. Label the first one
"standard" and label the second one "local." Illustrate how "going local" shifts supply,
demand, or both curves
Figure 1: Standard demand and supply for Sonoma economy
(Source: Created by Author)
In the above diagram, the standard demand and supply of the Sonoma economy is
going to highlight the importance of better policies that will be mainly looking to incorporate
the development of resources. This will not only help the economy in growing but also in the
determination of price and quantity. The normal demand and supply of the economy will be
determining the position of the new equilibrium and the value of price and quantity that will
determine the innovation in the supply chain management or factors influencing demand.
Through the shift in the demand and supply curve, the equilibrium position is going to
determine the impact of the law of demand and supply and how is affecting the overall
valuation of the commodities.

4Running head: Managerial economics
Figure 2: Local sets of demand and supply
(Source: Created by Author)
In the above diagram, the sets of demand and supply has been reflected from the view of
Oliver's Grocery in Sonoma economy. It has been clearly understood from the study that
using more of local resources will be utilising in producing the goods and if economy
consumes the goods internally then income and interest rate of both human resources and
capital resources respectively will increase. The shift in the supply curve towards right will
increase the supply of goods and services within the economy. Now the use of local resources
in manufacturing the goods and distributing the goods in the market will reduce the operation
costs. This in turn will decrease the price of goods that will increase the internal demand of
the economy. Through the incorporation of better understanding of the gaps and spending,
the whole income within the economy will automatically increase the purchasing power of
the economy (Mohalajengand Kroon, 2016). On the other hand, production within the local
economy will boost up rate of investment that is beneficial to increase production rate. This
will allow the economic resources in the form of both human and capital resources to reutilise

5Running head: Managerial economics
reserve of natural resources available within the economy. The shift in the supply curve will
allow the economy to shift their demand curve.
2. Explain the graphs
The study is significant in the sense that through the development of the economic
growth the overall economy will be keen to identify the resources. It is important for every
economy to increase the input substitution policy that will bring in more amount of
investment and investors of the economy should re-invest the amount earned from selling of
the goods. Moreover, if the economy is going to use the resources then the factor payment
given to the capital and human resources. The incorporation in the demand and supply will
allow the economy to identify the factors that will allow the information regarding the
development of demand and supply. If the local resource developer can use the resource
available in the economy in an efficient manner then the shift of the supply curves to right is
possible (Pauwels, 2016). This will definitely increase the supply chain management and will
allow the economy to bring the involvement of the resources. Through the development and
distribution of resources, the economy will be willing to shift both the supply and demand
curve so that the money spent on the goods can be reinvested in the economy. This will allow
the economy to bring lots of investment in the economy. Through the improvisation of
demand and supply the shift in supply curve will bring more money to the economy as the
factors of production will get payment and if they invest again in the economy then that will
reduce the gap and leakage within the economy.
. Now if the Oliver grocery uses local resources present within the Sonoma economy
to produce the grocery items and distributing goods in the market will bring an interaction
among the local consumers and local producers. Now due to the minimisation of the cost of
operation the producers will bring more goods into the local market. Now in most of the food
and grocery market, presence of intermediary actually increases the price for the producer

6Running head: Managerial economics
that is reflected on the price paid by consumers. Using local resources will minimise the
intermediaries that will reduce the price and demand will increase to right. However, use of
local resources in producing goods will not make huge fluctuations in P0. The price level will
be fixed and the quantity of goods within the economy will increase.

7Running head: Managerial economics
Reference list
Mohalajeng, L.E. and Kroon, J., 2016. Innovation through accelerators: A case for open
innovation. The Southern African Journal of Entrepreneurship and Small Business
Management, 8(1), pp.1-9.
Pauwels, C., Clarysse, B., Wright, M. and Van Hove, J., 2016. Understanding a new
generation incubation model: The accelerator. Technovation, 50, pp.13-24.