3. Assignment part 1 Cocoa Beans

4. If you look at the link given Indexmundi (2010) Cocoa Bean Prices – Monthly value http://www.indexmundi.com/commodities/? commodity=cocoa-beans&months=60http://www.indexmundi.com/commodities/? commodity=cocoa-beans&months=60 It gives a graph – but 2000 to 2010 – not time period asked for The data below can be used to create a graph in excel easily (see below)

5. a)Cocoa Bean Prices – January 2006 to September 2010 Source: Indexmundi (2010) Cocoa Bean Prices – Monthly value http://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=60 Accessed 13 October Title – must Have AND Date covered correct Price US $ Per Metric tonne Must have and must be Metric tonnes not value - See question

6. 50 word blurb Something like The diagram shows that with some minor fluctuations (especially in 2008), cocoa prices have risen steadily reaching a peak in January 2010 of $3522.10 per metric tonne. They now appear to be on a downward trend, falling to $2850.17 in September 2010. (it would be nice to have the figures but not vital)

7. Producers of cocoa beans You were given the following link Information on Producers of cocoa beans http://www.fao.org/es/ess/top/commodi ty.html;isessionid=DA3839122F16FDE4 E66B7F3156E63DBE?lang=en&item=66 1&year=2005http://www.fao.org/es/ess/top/commodi ty.html;isessionid=DA3839122F16FDE4 E66B7F3156E63DBE?lang=en&item=66 1&year=2005

8. b) Producers of Cocoa Beans 2005 MTonnes Source: FAO (2010) http://www.fao.org/es/ess/top/commodity.html;isessionid=DA3839122F16FDE4E66B7F3156E63DBE?lang=en&item=661&year=2005 Accessed 10 September 2010 title

9. c) Share of main consuming countries 2004-5 Source: UNCTAD (2010) http://www.unctad.org/infocomm/anglais/cocoa/market.htm Accessed 10 September 2010

10. Consumers of cocoa This was given as http://www.unctad.org/infocomm/anglais/c ocoa/market.htmhttp://www.unctad.org/infocomm/anglais/c ocoa/market.htm The pie chart was already there.

11. d) 2 interesting points about the general market shown above - Suggested good answers – need 2: i) Lesser Developed countries produce cocoa and More Developed Countries consume it ii) Dominance of a few suppliers should give power iii) Dominance of USA and Europe gives consumer power

12. e) 3 major factors affecting cocoa price recently 1.Increased demand due to increased demand for chocolate in rich countries 2.Reduced supply due to poor crops in west Africa (especially Ivory Coast) 3.Increased demand from speculators – especially Anthony Ward. Note this is a demand factor at present – when he releases the cocoa onto the market it will become increased supply.

13. 4 reasons – Demand and Supply Increased demand due to increased demand for chocolate in rich countries Reduced supply Drought in Ivory Coast Cocoa PRICES Arrows show in which direction This factor pushes price DEMAND Increased demand From speculators Especially Anthony Ward SUPPLY DEMAND

18. Assignment 1 part 2 Answers

19. Increased demand due to demand for chocolate in rich countries Supply Demand 1 Price Quantity P1 Q1 Demand 2 Demand shifts right Price rises to P2 Quantity rises to Q2 Q2 P2

20. Reduced supply due to poor crops in West Africa Supply 1 Demand Price Quantity Demand 1 P1 Q1 Q2 P2 Supply 2 Supply shifts left – Price rises to P2 Quantity falls to Q2

21. Increased speculation Supply Demand 1 Price Quantity P1 Q1 Demand 2 Demand shifts right Price rises to P2 Quantity rises to Q2 Q2 P2

22. g) Demand Elasticity Demand is price INELASTIC DEMAND –People love chocolate and are addicted. Would need a massive increase in price to stop buying it –Low proportion of household income – so higher price has little impact

23. h) Supply Elasticity Short run – very price INELASTIC supply Long run – more price ELASTIC supply Why – in long run can plant more cocoa trees Ivory Coast –Short run - Poor crop due to rains spoiling and cannot replant immediately –Long run – could plant more but low investment in cocoa industry –Low prices of cocoa in past have lead to shift to other products – so reduced long term price elasticity of supply

24. Diagram Supply curve should be steep – inelastic in short run Demand curve should be steep - inelastic

25. Diagram Demand 1 Supply 1 P1 Q1 Demand Curve shifts to D2 for speculation Demand 2 Demand Curve shifts to D3 for More demand for chocolate Demand 3 Supply curve shifts to S2 For poor crops S2 Q2 P2 Price rises a lot to P2 Quantity rises a bit to Q2 How much price rises Depends on a)Size of shifts b)Elasticity of D & S Re price

26. Finally Add up the marks on the front Highlight anything you are unsure about Give feedback When you get it back Comment in space marked if you disagree with anything DO NOT CHANGE ANY MARKS DIRECTLY