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ECON 1001-B BONUS PRESENTATION

ECON 1001-B BONUS PRESENTATION. Why there are so many hazardous food in Mainland China, but it is rare to find such food in HK, where it’s food is mainly imported from China?. BONUS PRESENTATION.

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ECON 1001-B BONUS PRESENTATION

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  1. ECON 1001-B BONUS PRESENTATION Why there are so many hazardous food in Mainland China, but it is rare to find such food in HK, where it’s food is mainly imported from China?

  2. BONUS PRESENTATION Recently, there are news reporting that watermelons in China are being injected with dyes. But why those in Hong Kong aren’t found with dyes?

  3. BASIC ASSUMPTION • To Solve these question, we are going to have 2 basic assumptions. • 1. High Quality food is sold at higher price. In other words, Low Quality food is sold at lower price. • 2.There will be fixed cost entailed when the food is imported to HK.

  4. FIXED COST • Those fixed cost can be tariff, transportation cost. • They are regarded as fixed cost as the amount of those cost has no relation with the quality of the good.

  5. EFFECT OF THE FIXED COST • The existence of the fixed cost will lead to change in relative price of the HIGH QUALTY WATERMELONS. • We can illustrate that by observing the following scenario.

  6. SCENARIO • Lets say: Price of the HIGH QUALITY watermelons is $5 • Price of the LOW QUALITY Watermelons is $2 • FIXED COST entailed is $1

  7. CALCULATIONS • In China, where there are no fixed cost, • Relative price of high quality watermelons: • $5/$2, i.e. 1HQ = 2.5 LQ • In HK, where there are fixed cost entailed, • Relative price of high quality watermelons: • $5+1/$2+1= $6/$3, i.e. 1HQ = 2 LQ • HQ = High Quality watermelons • LQ = Low Quality watermelons

  8. OBSERVATIONS • We can observe that there is a drop in relative price of HIGH QUALITY watermelons in Hong Kong, which is from 2.5 LQ to 2.0 LQ. • LQ = Low Quality Watermelons

  9. EXTENSION OF IMPLICATION • This implication is not only for explaining the case of watermelons, but also other kinds of food.

  10. COPE FINDINGS WITH DEMAND CURVE • We realized there is a drop in relative price for HQ in HK. • When we use the Law of Demand to analyze this incident. We can find that there will be an increase in Qd for HQ in HK. (As price and Qd are negatively related, according to Law of Demand.) • Qd = Quantity demanded • HQ = HIGH QUALITY Watermelons

  11. EXPLAINATION TO THE PROBLEM • A higher Qd for HQ means that HK people preferred HQ, thus it is relatively difficult to find LQ in HK. • Where in most cases, it is the LQ that are problematic. As suppliers may not want to dispose them, therefore they may add different kinds of additives, which may be toxic, to them.

  12. EXPLAINATION TO THE PROBLEM • This explains why there are less problematic food found in Hong Kong. Although it’s food is imported from China. • The reason leading to this phenomenon can be attributed to the fixed cost incurred when the food is transported to HK.

  13. OTHERS WAYS TO TACKLE • This may also due to the good quality control of foods by the government, or there may be many other reasons. • The one I suggest is only one of them.

  14. THE END

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