Question

BISHAR group is offering storage and transportation services through direct import of various fruits, meat and...

BISHAR group is offering storage and transportation services through direct import of various fruits, meat and vegetables which are hugely required in Sultanate’s of Oman.
This group is having their business agreement with various other countries to import the required quantities of goods. They are also extended their business contract with the other shipping agencies in the Sultanate.
Ammarbinsaif Al-habsi, who is working as a branch manager for BISHAR Group, announced that, the group main objective is to provide the required supplies to the entire Oman citizens irrespective of Covid-19 situational challenges. The required custom formalities are also completed with the export country authorities who are accepted to export the supplies from their countries.
He also stated that, previously their group is operated only in two marine routes; but now they are extended to one more route and totally through three marine routes they are importing the required supplies. Various businessmen, commercial agents and traders are also more depending on the same routes to import and export their products to other destinations.
He appreciated the adoption of the application of modern systems and technologies to accelerate the pace of clearance and customs inspection of all goods and products before their arrival in the Sultanate through Bayan system.
Al-Habsiinvited all stockist, wholesalers, retailers and importers in the Sultanate to utilizetheir service. He also requested the exporters to take advantage of the facilities available in the Omani ports.

Q3: Assume that, due to restrictions in transportation trading of vegetables has been effected. In this case how the price of the products will be changed by the change in transportation cost.

Q4: Discuss any two determinants of price elasticity of demand which are applicable to the nature of business of BISHAR group.


Q5: Due to lockdown situation in other GCC countries, supply of fruits are decreased, if so how supply curve moves; draw the model diagram and give a detailed explanation about shift in supply curve

Q6: BISHAR group wants to calculate the cost incurred in this business. List down various kinds of cost incurred. Draw a table and illustrate the cost incurred for the Company. Calculate TC, TVC, and TFC. ATC for various assumed levels of outputs sold.

Homework Answers

Answer #1

Answer3. Due to restrictions in transportation, the cost of transportation will incrrase. This will lead to decrease in supply of vegetables. As the supply decreases, there will be competition anomg the buyers and the price will rise.

Answer4. The two determinants of demand are:

1) Luxury vs necessity - The demand for luxury goods is elastic than the demand for necessities. The demand for necessities is inelastic because consumers can't stop consuming necessity like food items.

2) Availability of substitutes - The food items do not have substitutes when taken as a whole, thus their demand is inelastic as compared to the products which have close substitutes.

Answer5. As supply of fruits is decreased, the supply curve will shift leftwards. This will cause competition among buyers leading to rise in prices.

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