Imbalance in Food Supply and Growing Demand Case Study

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The Australian Economy in 2014-15

According to Robinson, Tsiaplias, and Nguyen in the Australian Economic Review, the policy concerning Australian macroeconomics is faced by several issues (12). In the fiscal sphere, the need for consolidation has been recognized since even with the measures that have been announced there has not been any anticipation in achieving structural balance in the Commonwealth Budget before 2018. On the other hand, the highest level of the forecasted net debt under the announced measures was quite low if to judge by both historical and international standards.

If to look forward, the 2015 levels of global growth will be directly affected by how the Euro-area economic conditions will change. Furthermore, there is a risk of the Chinese economy to decline thus causing large falls in the trade terms concerning Australia. When looking at the domestic economy, there is a possible decrease in the resources’ sector capacities due to the recently witnessed decline in the commodity prices despite the increases in LNG production. As a result, there is a heightened importance for the investments in the non-mining sector to underpin domestic demand growth. The overall trend in growth will continue to decline for the first part of 2015. Also, it is expected that the decline will be accompanied by inflation and the rise in the unemployment rates (Robinson, Tsiaplias, and Nguyen 3).

External shocks can ultimately cause shifts in supply and demand. The overall average income and spending per individual can cause significant shifts in demand, thus, with the decrease of the average income of the Australian population and increase in the unemployment rates, the demand will decrease. Supply shifts are also caused by several externally-created factors. For instance, the supply is often controlled by scarcity, which influences the setting of the prices on a particular product. Shifts in supply can also be caused by a shock in the rise of technological advances, globalization, and the efficiency of the supply chain. If for example, there is a newly-discovered deposit of oil, this deposit acts as a shock to an existing demand thus shifting the demand curve.

Diminishing Returns in the Bread Shop

The issue the bread show faces is linked to the unavailability of extra labor to serve an increased number of customers on Saturdays and the lack of physical space in the shop which causes customers major inconveniences. Even though more people assisted in providing services for the customers, the lines workers created to use the cash till also disrupted the quick services. Thus, the shop owner is advised to extend her show so that there is more room for a couple more cash tills and as a result more customers. If the shop is a fixed size and cannot be extended, then it is advised to move to a larger location nearby so that there will not be any major losses in customers.

Malthus and the Dismal Science of Economics

The issue that is raised in the case study is connected with the geometrical growth of a population when it is uncontrolled and the arithmetical growth rate of food output, which causes an imbalance in the food supply and the growing demand for it (Malthus 13). While the growth rate of the population slows down when a country becomes more developed, developing countries are at the highest risk of being faced with starvation. With increased pressure on the land in the form of farming, it is still possible for zero marginal productivity of labor on family farms in developing countries and still enough food. This can happen when the family plans its food intake and produces precisely as much as it needs without the employment of additional labor.

Works Cited

Malthus, Robert. First Essay on Population, London, UK: Macmillan, 1926. Print.

Robinson, Tim, Sarantis Tsiaplias, and Viet H. Nguyen. “The Australian Economy in 2014-15: An Economy in Transition.” The Australian Economic Review 48.1 (2015): 1-14. Print.

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