Sample Economics Essays on Product Demand

The dairy products industry is a non-seasonal industry whose production levels are well affected by microeconomic variables such as demand and supply. Dairy products are normal goods and as such follow the law of demand. A normal good experiences an increase in its demand due to an increase in disposable income. Consumer demand has a positive effect on production levels. An increase in consumer demand will lead to an increase in production while a decrease in consumer demand will lead to a decrease in production levels in the dairy products industry.

Demand and supply in the dairy products industry is affected by several determinants. Demand is affected by tastes and preferences, price of related products, income level, future price expectations, and population. A change in tastes and preferences in favor of a good will shift the demand curve to the left since quantity demanded will increase. A negative trend in tastes and preferences will reduce demand hence shift the demand curve to the right. This movement is also observed for the other determinants of demand. Supply, on the other hand, is determined by cost of production, future price expectations, nature and climatic conditions, and profitability from alternative products. An increase in these elements will cause a leftward shift in the supply curve while a decrease will result in a rightward shift in the supply curve.

The effect of change in tastes and preferences on demand is well shown in the embattled Boeing’s case. An article entitled “Boeing had its worst year in 3 decades, posting negative orders for 2019 as 737 Max fallout roils the company (BA)” in the Business Insider clearly explains this microeconomic concept (Slotnick, 2020).

The airline industry is an example of a luxury good whose quantity demanded increases more than proportionally with a proportional increase in income. Boeing got into trouble when two of their flagship planes, the 737 Max series, nose-dived and crashed leading to public outcry as human error was blamed as the cause. Determinants of demand and supply in the airline industry include income and tastes and preferences just to mention a few. A positive change in these factors will shift both demand and supply curves to the right. Consumers will be willing to purchase more at the prevailing prices while producers will increase their supply at the prevailing prices.

The microeconomic concept of demand and supply is beneficial to both consumers and producers. This information helps the latter in demand forecasting and hence anticipating certain shocks in demand. This will enable them to respond appropriately. The consumers, on the other hand, use the knowledge on supply and demand to anticipate future changes in supply and hence react accordingly now. An expected natural calamity, for instance, may force consumers to increase demand now as they expect supply to reduce extremely in the future.


Slotnick, D. (2020, January 14). Boeing had its worst year in 3 decades, posting negative orders for 2019 as 737 Max fallout roils the company (BA). Retrieved from