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Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qs=Qd 
Quantity of Cranberries 
D* 
S* 
“A” 
The Market for Cranb...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
D* 
S* 
“A” 
16 M 
Qs 
The Harv...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
“A” 
8 M 
Qd 
S* 
“B” 
16 M 
Qs 
Quantity of Cranberries 
The Market S...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
The Market PRICE wants to DECRE...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
D* 
S* 
“A” 
16 M 
Qs 
S 1 
“C”...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
The Government can step in and ...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
At “Pe” the government would in...
Pe 
Price 
Of 
Cranberries 
Market for Cranberries 
8 M 
Qd 
“B” 
Quantity of Cranberries 
It is not realistic to think th...
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Cranberries--what happens to the Surplus?

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Cranberries--what happens to the Surplus?

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Cranberries--what happens to the Surplus?

  1. 1. Pe Price Of Cranberries Market for Cranberries 8 M Qs=Qd Quantity of Cranberries D* S* “A” The Market for Cranberries in equilibrium at Price “Pe” and Quantity of 8 million barrels where Quantity Supplied = Quantity Demanded. (Private Market)
  2. 2. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries D* S* “A” 16 M Qs The Harvest for 2014 is much higher than expected. While the market absorbs 8 million barrels (Quantity Demanded) the Quantity Supplied is 16 million—Point “B”. Quantity Supplied is GREATER THAN Quantity Demanded. (Private Market)
  3. 3. Pe Price Of Cranberries Market for Cranberries “A” 8 M Qd S* “B” 16 M Qs Quantity of Cranberries The Market Supply Curve, “S 1” shifts to the RIGHT indicating an INCREASE in Quantity Supplied S 1 at any given Price. D* (Private Market)
  4. 4. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries The Market PRICE wants to DECREASE To Point “C”, which would be good for Consumers but bad for Producers of Cranberries. D* S* “A” 16 M Qs S 1 “C” (Private Market)
  5. 5. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries D* S* “A” 16 M Qs S 1 “C” (Private Market) SURPLUS If the Price did not decrease we would Have a SURPLUS of 8 M barrels of Cranberries Instead of a Surplus of something less than 8 million (the Quantity Demanded would increase at a lower price absorbing some of the Surplus. How can we resolve this?
  6. 6. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries The Government can step in and become a market participant on the DEMAND side. D* (Private Market) S* “A” 16 M Qs=Qd S 1 D 1 (Private Market + Govt)
  7. 7. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries At “Pe” the government would increased the Quantity Demanded by 8 million barrels of Cranberries to absorb the increase of 8 million in Quantity Supplied— Point “B”. The Demand Curve (“D 1”) for Cranberries would shift to the RIGHT The Price would remain at “Pe” at Quantity 16M. Producers happy and Consumers none the wiser. D* (Private Market) S* “A” 16 M Qs=Qd S 1 D 1 (Private Market + Govt)
  8. 8. Pe Price Of Cranberries Market for Cranberries 8 M Qd “B” Quantity of Cranberries It is not realistic to think the Govt will pick up all this slack. Cranberry producers could collectively seek to promote the benefits of Cranberries to individuals and those in the food industry as a stand alone product or a complement to some other existing product. D* (Private Market) S* “A” 16 M Qs=Qd S 1 D 1 (Private Market + Govt)

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