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Chocolate Prices To Fall As Cocoa Surplus Seen At Six Years High Summary

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Paper 1: Chocolate prices to Fall as Cocoa Surplus Seen at Six Year High
In the article “Chocolate prices to Fall as Cocoa Surplus Seen at Six Year High” written by Marvin G Perez, it states that the prices of chocolate are set to fall due to the largest surplus of cocoa in six years according to the Cocoa Organization (Perez, 2017). The top growers of cocoa are seeing an increase of cocoa by nearly 15%, which will also increase the demand for grinding of cocoa beans by 2.9% (Perez, 2017).
There is a worldwide increase in the production of cocoa and it’s going to lead to a surplus in the production of cocoa. In graph one, the market for cocoa starts off with S1 and D1 meeting at an equilibrium price of $1.00 (P1) and the equilibrium quantity supplied and demanded is 150 (QD). As the worldwide countries realize that they are going to be able to produce more cocoa than usual, then it will lead to a supply curve shift to the right (S2). Because of the new supply curve, there is now a new equilibrium price of $.50(P2) and a new quantity demanded of 200 (Q2). This causes prices to be sticky, and now there is more quantity supplied (QS) then there is quantity demanded (QD). This displays the surplus of cocoa. …show more content…

Graph one is an input to graph two as the lowering prices of cocoa affect the prices of chocolate. In graph two, S1 and D1 meet at an equilibrium price of $2.00 (P1) and the equilibrium quantity supplied and demanded is 50 (QD). As the prices of cocoa are being lowered, the prices of chocolate will decrease as well since cocoa is a major ingredient to chocolate, causing the supply curve to shift to the right in the market

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