For households facing tighter budget constraints, budget canned beans are an inferior good. In 2022, the price of these canned goods rose sharply. Speculators anticipated that supply-chain disruptions would persist throughout the year after adverse weather and rising fertilizer costs reduced the bean harvests in major growing regions. (lines 1–5)
The retail price increased by nearly 18 per cent between January and June 2022 following predictions of lower yields in North America. The International Legume Consortium predicted that regional processors would produce 45 million fewer cans, a tenth less than had been forecast. North America is a major processing hub, second only to East Asia, where export volumes also fell during the period. (lines 6–11)
ValueFoods, a leading discount grocery chain, passed on some of the increased raw material costs to customers, raising the price of budget canned beans by 8 per cent. A spokesperson for the supermarket chain stated, "Operating margins on value-tier products are incredibly tight, leaving us with no choice but to adjust shelf prices." (lines 12–14)
Despite these price rises, global consumption of budget canned beans grew by 5.4 per cent in 2022 as falling real household incomes forced consumers to switch from premium alternatives. (lines 15–16)
Define the term 'inferior good' (Extract B, line 1).
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.