Case Study

The Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) has added another 20 items to the2021 Hari Raya Puasa Festive Season Maximum Price Control Scheme (SHMMP) list, bringing the totalto 32.

Minister Datuk Seri Alexander Nanta Linggi said the second phase of the 2021 Hari Raya Puasa SHMMP, which involvesitems from the vegetable, dry foodand sea productcategories, will be enforced from May 6.

"The second phase will run for 15 days, beginning from May 6 until May 20, which is seven days before and after the celebration," he said in a statement today.

Prior to this, KDHNHEP announced an SHMMP of 12 items from four categories, namely chicken, chicken eggs, meatand sea products, to be implemented for 30 days beginning from April 21 to May 20in an effort to curb price hikes of essential goodsduring Ramadan and ahead of Hari Raya Puasa.

Under the second phase, the items also include tomatoes; red chillies; imported round cabbage (Indonesia and China, excluding Beijing cabbage); long beans; green choy sum; long eggplant; cucumber; old ginger; coconut (wholesale); grated coconut (retail); imported red onion (China); onion (Holland); garlic (China); dried chillies; imported potatoes (China); and groundnuts.

Nanta said theHari Raya Puasa SHMMP implemented in phases is based on data-driven marketing with evidence based onmarket prices and consumers' feedback.

"The 2021 Hari Raya Puasa SHMMP has been implemented to stabiliseprices of critical items mainly used during the festival season and to enable as many people as possible to celebratein a peaceful, happy and harmoniousatmosphere," he said.

Questions

(a) Use the model of demand and supply to evaluate how the market price of chicken is determined in the market.

(b)Based on the case above, discuss TWO (2) demand factors and TWO (2) supply factors that have contributed to rising food prices.

(c) Use the model of demand and supply to explain what happens when the government imposes price ceiling (Hari Raya Puasa SHMMP) in the dry food market.