Market Price Vs Quantity Case Study

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Market price and Quantity are two vital keys in every market; changes in one of them will certainly influence the other. So theoretically, if a company contributes a large amount of commodity to the market, it’s possible to change the market value of the commodity by changing its supplied quantity. This is the greatest advantage for suppliers in monopoly market. However, will such thing exist naturally in this world? How is it going to influence the world? And how long it can be maintained? One clear example is when China which provides up to 90 percent of the world’s rare earth supply began to reduce its annual export of rare earths by 40 percent in July 2010. As you can see from the diagram, the price of rare earths rose up drastically due to China’s action. According to Sydney-based Lynas Corp (2010), “the price of neodymium oxide used in magnets in BlackBerrys has surged more than fourfold to $88.5 a kilogram from $19.12 in 2010 because of rising demand and reduced supply from China”. This is also expected to happen in LCD monitor market, as well as other products that are manufactured using rare earths.…show more content…
Subsequently, the companies will decrease their LCD monitor production, leading to the upsurge of its price which will directly impact the market demand. A statement by Panasonic India managing director Manish Sharma to the rise of LCD monitors price by 2-4 percent in The Economics Times (2012), “The signals are not good considering consumer demand has already been low due to recurrent price hikes on account of commodity inflation and other macro-economic conditions”. From this, it can be seen that China is indirectly manipulating the market price of LCD

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