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)