Supply and Demand: Market, Prices & Price Setting

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The paper will focus on an article talking about beer. It was chosen because beer is rated as the number one alcoholic beverage. Besides, it is also ranked as the third most preferred drink in the world; tea and water take second and first place respectively.

Description of this article

The article “law of supply and demand” by Griffith basically describes general trends in consumption of beer; however, more emphasis is placed on the past three years. He asserts that demand for this commodity has gone up and that certain types of beers are enjoying this trend even more. Griffin (2009) then gives suggestions on what is likely to occur in the future based on recent patterns. It has also been shown that production of beer will be affected by a series of external factors such as the current US economic climate as well as raw material shortage. On top of that, the writer adds that competition within this sector is getting stiff. This is the reason why several beer makers are pursuing mergers or acquisitions; several examples are given. Lastly, the article discusses the types of beers that are flying off shelves and a holistic analysis is done on how society now perceives beer today.

Demand for the good in relation to the article

My demand for the good changed because I realized that beer is not just a reserve for blue collar workers. It can be utilized as a cooking additive since numerous recipes now use it for its distinct flavor. On top of that, I realized that various restaurants now treat beer in the same manner as wine since they normally offer guides on the product. This commodity is not just a reserve for middle income workers as the high end of the alcohol market is also interested in it as well. (Harrington, 2007) I also understood why commodity prices have gone up and this made me more tolerant of price increases by manufacturers.

A series of issues can create changes in demand. First of all, if there is an alteration of consumers’ income, then this will be reflected on the quantity demanded. Beer consumption has gone up despite the economic turmoil in the country. One reason for this observation is the fact that the commodity is treated as a social lubricant that assists many individuals to get by tough economic times.

Also, if the population rises or falls, then this is likely to be reflected in beer consumption patterns. Population increments create greater consumer bases and hence greater demand. Perhaps one of the most critical factors in determining demand for beer is price. Demand is directly proportional to price for a particular brand of alcohol. Nonetheless, the same does not hold for substitute products or substitute beers. For instance, in the article, it was stated that craft beers are gaining huge market share irrespective of the fact that there are highly priced. This implies that people can forego price concerns once the quality of the product meets their expectations. On the other hand, complementary products can also cause surges in demand for beer; the most notable is wine. In 2004, the quantity of wine demanded slightly overtook beer but this trend was again overturned in subsequent years. Consequently, demand for beer is highly affected by people’ tastes and preferences. There was no tangible price increment for beer when compared to wine; therefore this change in consumption trends may simply be explained by alterations in the demand for the product. Consumer tastes are quite difficult to predict and it may sometimes be necessary to be ready for anything. Studies show that traditional American lagers are waning in preference as craft imports are gaining more market share. (Jones, 2008) However, when prices of complementary alcoholic drinks go up, then the demand for beer is likely to go down.

Examples of changes in supply in the context of the good

Supply of this commodity changed due to increases in prices of some input goods. There is a worldwide shortage of hops and this has caused the cost of the available ones to go up. Additionally, barley prices have been fluctuating with time. The end effect of these patterns is that they have led to a distinct decrease in goods supplied. External economic conditions also have a part to play. The US dollar is not as strong as it used to be; this is affecting prices of essential raw materials such a barely. Supply has therefore diminished with time. Besides the latter factor, technology limitations have also led to reduced beer supplies for certain manufacturers. Craft breweries are currently restrained by their technologies as they cannot expand as rapidly as giant breweries and this has substantially reduced the quantity of beer supplied to the market.

What would happen if the government intervened

If the government opted to restrict the maximum price charged for this good, then it is likely that the quantity supplied would decrease. Production techniques would be altered so that only the cheapest alternatives are utilized. Less efficient production means less products supplied to the market. In fact, analysis of a general supply curve for beer shows that quantity of goods supplied increases with increases in prices of the commodity. When producers can no longer charge high prices for their products, then this is likely to reduce the amount available to consumers. Overly, there would be a shortage of beer since demand for the commodity would be much less than its supply. Therefore, it is likely that the prices of the product will go up and will be as near to the maximum price set as possible. However, if this continues for a long time, then it is likely that demand will again reduce.


Beer like many other commodities demonstrates the existence of supply and demand tensions. The price of beer usually goes up when demand exceeds supply. This was seen when demand for craft beer exceeded supply. Additionally, prices have fallen in instances where demand is less than supply then the end result is a fall in beer prices as seen in 2004 when consumers opted for wine as their preferred alcoholic drink.


Griffin, J. (2009). Law of Supply and Demand. Web.

Harrington, R. (2007). Wine and food pairing. NY: Wiley & Sons Press.

Jones, J. (2008). Beer back to lead over wine. Web.

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BusinessEssay. (2022, December 10). Supply and Demand: Market, Prices & Price Setting.

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BusinessEssay. (2022) 'Supply and Demand: Market, Prices & Price Setting'. 10 December.


BusinessEssay. 2022. "Supply and Demand: Market, Prices & Price Setting." December 10, 2022.

1. BusinessEssay. "Supply and Demand: Market, Prices & Price Setting." December 10, 2022.


BusinessEssay. "Supply and Demand: Market, Prices & Price Setting." December 10, 2022.