Question

In 2020, production of soya beans is 351 416 tons and in 2019, total production was 267 490 tons. The price of soya beans at beginning of 2020 was K4 400/ton and at beginning of 2019, price was K1 400/ton. Explain this scenario within context of demand and supply. What do you think will happen to price of soya beans in 2021 and why?

Answer 1

The price of soya beans in 2021 will increase. This is because from 2019 to 2020 there has been an increase in production i.e. an increase in supply of soya beans. However, despite that there has been an increase in price of soyabeans. This has occurred because the demand of soya beans has increased faster than increase in supply. This means that soyabeans is a desired commodity whose demand is continuously increasing and will increase in 2021 as well. As a result price of this commodity will increase.