Economics

Assignment 2

1. In order for a ceiling to be effective it must be _________ the equilibrium price. ( 5 points)

a. Above

b. Below

2. ______________ surplus is the amount that is leftover after products are purchased at a price less than you were willing to pay.

a. Consumer Surplus

b. Producer Surplus

3. TUNA

HONG KONG—Tuna fish has surged in popularity thanks to pantry loading during the coronavirus pandemic, but producers of the canned fish are dealing with higher prices and other challenges that are making it difficult to keep up with the increased demand.

Americans have been buying more canned tuna during the economic downturn, in part because it is one of the cheapest proteins on the market, costing as little as $1 for a 5-ounce can. Bumble Bee Foods said sales of canned and pouched tuna jumped as much as 100% from mid-March to early April, while Costco Wholesale Corp. COST +0.12% put limits earlier this year on how many tuna containers a customer could purchase.

Even after the initial feeding frenzy, canned tuna producers say sales for these products have remained significantly higher than a year earlier.

Companies have been able to keep retail prices steady for tuna so far, even though average wholesale prices for tuna were up 41% from a year earlier in the year through May after reaching decade lows late last year, according to data from the Food and Agriculture Organization of the United Nations.

. Analysts say wholesale prices could remain elevated or trend higher in the coming months due to challenges of getting enough fish to meet the surge in demand.

Pittsburgh-based StarKist Co., which is owned by a South Korean conglomerate, processes and cans most of its tuna in American Samoa, a tiny territory that is closer to New Zealand than it is to the continental U.S.

The company has been unable to buy tuna from some of its regular suppliers during the pandemic. Border restrictions and fishing-port closures at some neighboring Pacific islands—where StarKist often buys tuna—have prevented fishing vessels from coming in and delivering their catch.

Compounding matters, StarKist’s plant on American Samoa recently encountered mechanical issues that took a while to fix, in part because the company had to charter a plane to fly in people to bring parts and do the repairs. Then shipments of canned tuna to the continental U.S. were held up because the ship that services the archipelago broke down twice and had to be replaced.

“There have been a lot of complaints—rightly so—because they’re not getting their products,” said Mr. Choe, referring to retailers. He added that problems at the plant probably could have been easily and quickly been fixed were it not for the pandemic.

For decades, the world’s largest producers of canned tuna struggled to reverse falling sales and shed negative perceptions that their products were old-fashioned, pungent, high in mercury and environmentally unfriendly. Then the pandemic occurred, and the 20th-century pantry staple became popular again.

Thai Union, the owner of El Segundo, Calif.-based Chicken of the Sea, said in May that sharply higher sales of canned tuna during the first quarter helped the group achieve its best operating performance in years. In March alone, sales of so-called ambient seafood—which includes canned products—jumped 50%.

“People are asking, is this pantry-loading? Is this consumption? I would say, every pantry-loading leads to higher consumption. People are not just leaving that in their pantry. They are consuming it,” Joerg Ayrle, Thai Union’s chief financial officer, said on a conference call. He also said the company has released videos with recipes for various types of tuna fish cakes and tuna pancakes.

4. Mac and Cheese

Kraft Heinz CEO: Mac & cheese sales are soaring amid the coronavirus outbreak

A quarantined America is opting for tried and true comfort food found inside cardboard boxes, metal cans and plastic wrappers as they deal with tough times stemming from the coronavirus pandemic.

Besides Hormel’s iconic Spam seeing red-hot sales, good old-fashioned Kraft Macaroni and Cheese appears to be flying off the shelves and into over-stuffed cupboards.

So much for those keto diets.

“The champion for sure is Kraft Mac & Cheese,” remarked Kraft Heinz CEO Miguel Patricio in an interview when asked about top-selling products right now. Patricio said Kraft Heinz brands such as Oscar Meyer, Capri Sun and Philadelphia Cream Cheese are also experiencing brisk sales.

“People are looking for comfort and for familiarity. And so these are all brands that have been with consumers for a long time and brands that they love,” Patricio said.

For Patricio, the pickup in business couldn’t come at a better time.

5. Energy

An abundance of fossil fuels combined with advances in technology to harness wind and solar power has sent energy prices falling around the world.

6. Coca-Cola Sales About half of Coca-Cola’s business comes from away-from-home venues—the restaurants, bars, movie theaters and sports stadiums that were shut around the world during the second quarter because of the pandemic.

Coca-Cola has been slammed by the coronavirus pandemic. It remains far from clear how quickly it can get back on track.

The beverage giant said Tuesday that second-quarter sales fell 28% from a year earlier as out-of-home consumption—everything from restaurants to vending machines—plummeted.