Page 36 - DECO101_MICRO_ECONOMICS_ENGLISH

Unit 3: Supply and Market Equilibrium

Notes
As the Indian production is below the demand, the country continues the import of both
nutmeg and mace. Much of the imports are by the oleoresin industry, they said. During
2008-09, India imported 1,325 tonnes of nutmeg valid at ` 25.37 crore and 265 tonnes of
mace worth ` 8.46 crore, they said. At the same time, the country has exported an estimated
3,275 tonnes of nutmeg and mace worth ` 91.87 crore. A good chunk of the Indian exports
of this commodity is value-added items such as oleoresins, oil and in powdered form, they
said.
Nutmeg and mace, their oleoresins and essential oils are used in the food and beverage
industries. Although whole nutmeg is available, ground nutmeg is more popular. The
ground form is mainly used in the food processing industry, extraction industry sources
said.

Nutmeg is a standard seasoning in many Dutch dishes. Nutmeg and its oleoresin are used
in the preparation of meat products, soups, sauces, baked foods, confectioneries, puddings,

seasoning of meat and vegetables, to flavour milk dishes and punches. The fl eshy outer
cover of the fruit is crystallised or pickled or made into jellies, they said.
Mace is sold either whole or as ground spice and is used in savoury dishes. It is used
to flavour milk-based sauces and processed meats such as sausages. Soups, pickles and

ketchup, pickles and chutneys are also seasoned with mace. Because of its aroma, the
essential oil is used as a natural flavouring extract and is employed for fl avouring food

products and liquors. Nutmeg oil and mace oil are used mainly in flavouring soft drinks,

canned foods and meat products.
Nutmeg oil is used in cosmetics, men’s perfume and toiletries due to its aromatic properties.
Mace oil possesses almost identical “physico-chemical” and “organoleptic” properties as
nutmeg oil. Mace oil is also used to a limited extent in perfumes and soaps. They are used
in the pharmaceutical industries also, industry sources told Business Line.
Nutmeg is produced in the tropical areas of Indonesia and the West Indies. The world
production of nutmeg is about 25,000 tonnes a year. The global demand is also estimated
at around this level, they said.
The production of mace is about 3,000 tonnes. Indonesia and Grenada dominate production
and export both products with a world market share of 75 per cent and 20 per cent
respectively. The other producing countries include India, Malaysia, Papua New Guinea,
Sri Lanka and a few Caribbean islands.
Source: www.thehindubusinessline.com

3.3 Shift and Movement of Supply Curve

Top understand the shift and movement of supply curve better, we must recognise the factors
that affect supply. Other than price of the commodity, the important factors that affect supply of
a commodity are:
1. Price of inputs: In addition to the price of the commodity being the main factor as stated
in the Law of Supply, the price of production inputs also plays a part. The lowest price at

which a firm can sell a good without losing money is the amount of money that it costs to
produce it.

Example: Firm produced a shirt by using inputs worth ` 500 and sells the shirt at
` 500.

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