1. PRICE BEHAVIOUR OF SOYABEAN
OIL AND PALM OIL
MICRO ECONOMICS
Id: 112113071
Course Teacher
Prof. Dr. BAQUI KHALILY
2. CONTENTS
Law of Demand
Shifting of demand curve
Law of Supply
Elasticity of Demand
Market Equilibrium Price
Income and Substitution
Effect
3. Law of Demand for Soyabean Oil
Price(Taka/Lit) Demand(per month)
TK.120 10 Kg/Lit
TK.128 7 Kg/Lit
TK.135 5 Kg/Lit
Table: Demand for Soyabean oil
4. P(tk) D
135
128
Price of Soyabean Oil
120
D
0 5 7 10
Q(Soyabean Oil)
5. Law of Demand for Palm Oil
Price (Taka/ Lit) Demand (Per month)
TK. 95 4 Kg(Lit)
TK.106 3 Kg(Lit)
TK.112 2 Kg(Lit)
6. P(tk)
D
Price of Palm Oil
112
106
95
D
0 2 3 4 Q(Palm Oil)
7. Shifting of Demand Curve
D'
P(tk)
Price of Soyabean Oil
D
120
D'
D
0 5 7 10 11 Q(Soyabean Oil)
Figure : Shifting of Demand Curve for Soyabean Oil
When income increases from tk 25,000 to tk. 30,000
8. Shifting of Demand Curve
P tk
D'
Price of Palm Oil
D
95
D D'
0 2 3 4 5
Q(Palm Oil)
Figure: Demand Curve Shift for Palm Oil
When income increases from tk 25,000 to tk. 30,000
9. Law of Supply for Soyabean Oil
Price (Tk./per liter) Supply (per month)
Tk.120 400
Tk.128 450
Tk.135 550
Table3: Supply for Soyabean oil
10. Law of Supply
P(tk)
Price of Soyabean Oil
S
135
128
120
S
0 400 450 550
Q(Soyabean Oil)
11. Law of Supply for Palm Oil
Price (Tk/ kg) Supply(Per Month)
Tk. 95 100
Tk. 106 150
Tk. 112 200
Table: Supply for Palm Oil
12. Law of Supply
P tk
112
106
Price of Palm Oil
95
0 100 150 200
Q(Palm Oil)
Table: Supply for Palm
Oil
13. Price elasticity for Soyabean oil
Price(Tk) Quantity
(litre) Ep
120 10 -
128 7 4.5
135 5 5.2
Here Ep > 1 it indicates demand of soyabean oil is elastic.
14. If price is increased by 1% then demand will
decreased by 4.5%
If price is increased by 1% then demand
will decreased by 5.2%
15. Price Elasticity for Palm oil
Price (Tk) Quantity Ep
(Litre)
95 4 -
106 3 2.16
112 2 5.89
16. If price is increased by 1% then demand will
decreased by 2.16%
If price is increased by 1% then demand will
decreased by 5.89%
17. Income Elasticity for Soyabean Oil
Income Quantity EI
(Tk) (Litre)
25,000 10 -
30,000 11 .50
40,000 13 .55
18. •If 1% change in income leads to .50% change in
quantity demand for Soyabean Oil.
•If 1% change in income leads to .55% change in
quantity demand for Soyabean Oil.
19. Income Elasticity for Palm Oil
Income Quantity E
I
(Tk) (Litre)
25,000 4 -
30,000 5 1.25
40,000 7 1.20
20. •If 1% change in income leads to 1.25% change in
quantity demand for Palm Oil.
•If 1% change in income leads to 1.20% change in
quantity demand for Palm Oil.
21. Price of Oil per liter
P(tk)
S
P2 Excess Supply
E D=S
Po
Excess Demand
P1
D
0 Qo Q
Figure 5: Equilibrium Price & Quantity
22. Income and Substitution Effect
P1
Y
P
• C
•B • A
Palm Oil
IC1
IC2
X1
O X
X" X'
Soyabean Oil
Figure: Substitution and Income Effect (when
price of soyabean oil increases)
