JUST LOOK AT THE HEADLINE OF THIS ARTICLE *stares*. AHYES. thats the reason why my mum has been complaining recently, & it all boils down to MONEYY. PRICE HIKES IN COMMODITIES have been the concern of the population these days.

Jian Wei has done a great job on analysing the reasons as to why there's been a rise in the price of staple foods globally. (go read if you haven't!) The above article is taken from 3 May 2008 Straits Times.

"The price of staple foods have been rising globally, driven by increasing demands from China and India and crop failures, among other things" (the first highlighted portion)

1. Significant increase in demand for staple foods from BIG countries (high population) like China and India.
- population boom as infant mortality rate decreases due to better healthcare facilities
- economic progress leads to a higher purchasing power of the population.
** this shifts the demand curve RIGHTWARDS!

2. Decrease in supply of staple foods
- adverse weather conditions destroy crops, leading to crop failure.
- increase in demand for biofuels (example, corn), leading to a decrease in availability of staple food for consumption.
** this shifts the supply curve LEFTWARDS!

====> simultaneous decrease in supply and increase in demand leads to PRICE HIKES!

lets read further.... ...


"....there were variations in prices across supermarkets, even for the same item..... their supermarkets cater to different segments of customers from locals to exptriates .......... "

This illustrates an example of price discrimination.
- there's two markets with different price elasticites of demand (comparing a supermarket located at Ang Mo Kio and one supermarket located at Raffles City)
-since demand for good is price elastic for a supermarket located at Ang Mo Kio, a lower price is charged
-on the other hand, demand for good is price inelastic for a supermarket located at Raffles City, a higher price is charged.


"Differential pricing of products is common among retailers worldwide as each store has to take into account operating costs and rentals"

This illustrates an example of price differentiation.
- higher rental and operating costs incurred for the supermarket located at Raffles City compared to the supermarket located at Ang Mo Kio.
- due to the difference in the cost of the goods sold, a different price would have to be charged in different locations.


i'm going to consult Mr How on whether or not my analysis on the part on the PRICE DISCRIMINATION and PRICE DIFFERENTIATION is right. yeahh. *fingers crossed* if there's really something wrong about the price discrimination vs price differentiation part, please feel free to drop your comments. thankyou.

shuhui :D