Why The Price Of Free-Range Eggs Expected To Rise?

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Assignment 2: Article Analysis Question 1 – The reason of the price of free-range eggs is expected to rise. The price of free-range eggs rise is mainly due to the demand of free-range eggs is increasing but the supply of free-range eggs is decreasing. First of all, if for the same purpose of the protein supplement, eggs are cheaper than beef, and scientist also suggested that eating eggs gives a better outcome of people’s health. In addition, compare with cage-eggs, people in Australia are prefer to eat free-range eggs (Mannix 2016). Therefore, when people’s preference is highly intended to eat free-range eggs by different influences, the demand of free-range eggs will increase (Parkin & Bade 2016, p. 89-90). It can also be shown in the graph …show more content…

First of all, it is hard to find a substitutes of eggs, but there is a substitute for free-range eggs, which is the cage-eggs. Cage-eggs are cheaper and easier to buy. But for those who prefers to eat free-range eggs, the price change on free-range eggs may not change their preference. Because even free-range eggs are more expensive than cage-eggs, but it still only takes a small proportion of people’s total income (Parkin & Bade 2016, p. 121-122), and people’s habits are usually hard to break. Furthermore, eggs can be used to make many delicious food, and it is a necessity of most people’s daily life. And also eggs are defined as a food. Food is a broadly defined good which has an inelastic demand because there are poor substitutes for food (Parkin & Bade 2016, p. 122). Therefore, the price elasticity of demand of free-range eggs is inelastic, which means when the price of free-range eggs changes, the percentage change in quantity demanded of free-range eggs will less than the percentage change in its price (Parkin & Bade 2016, p. 120). Which can be shown in graph …show more content…

If the price ceiling is above the equilibrium price, there is no influence on the market because people already paying under that price. But if the price ceiling of free-range eggs is below the equilibrium price, it will lead to a huge effect on the market. Firstly, the quantity demanded of free-range eggs will increase and the quantity supplied will decrease because of the fall in price, and the shortage of free-range eggs occurs. Secondly, both consumer surplus and producer surplus will decrease, which cause an inefficient free-range egg market (Parkin & Bade 2016, p. 179-181). Which also shows in Graph

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