Course:ECON371/UBCO2009WT1/Group 7/Article7

Introduction:

The economic of the improvement of the quality of apples, peaches, cherries and strawberries that through increases in efficiency, and through the reduction in losses associated with the need to store products. While it is relatively straightforward to assess the economic benefits associated with reducing storage costs, and eliminating disorders that develop during storage of products, it is more difficult to assess the benefits associated by improving overall quality. Quality is usually defined as all those characteristics of a food that lead a consumer to be satisfied with the product. So, people focus on aspects of quality associated with texture, taste and flavour since consumer responses to these attributes are most difficult to assess in fruit.

1. Production costs and prices. The cost is the basis for determining the price of fruit. The level of cost determines whether the product competitive advantage and profitability. Seedling, Labor costs, chemical fertilizer and pesticide costs, and raw materials analyze the cost, and the cost of fruit constitutes an important part. The same product, in the same market, lower prices product have the high competitiveness, which is a prevailing fact as well as a basis for economic analysis, and micro-economic assumptions of goods sold as many as the commodity prices decrease. Because of there are 14.4 million on the fruit quality may cause the prices of the fruit increase.

2. The quality of apples, peaches, cherries and strawberries are certainly an appropriate use of RosBREED to meet the needs of the community has special characteristics; its essence is the value of RosBREED. RosBREED quality is good or bad, reflects the value of RosBREED size and the extent to meet consumption needs. As the market competition becomes increasingly fierce. RosBREED in the market is already saturated, the market price differentials had narrowed or disappeared, consumers make more and more attention on quality. The price competition of RosBREED from the past mainly price competition to quality competition and equal emphasis on fruit quality will largely determine the RosBREED position in the international market.

Prof's Comments

You should consider the impact on a market that is the consequence of these investments. One way to think of quality is as something that shifts out the demand curve. If the average quality of apples increases, then the demand for apples increases. This will increase the price, if the supply is held constant. If production increases, then the price won't increase as much. If the research results in a great increase in quantity, with little change in quality, then the price may actually fall.

An other issue to consider is why has the market itself not invested in this research. Knowledge is a public good. If one company produces it, it is often difficult to exclude other people from using the knowledge. Thus, the market generally under invests in research. One way around this is to let companies own genetic material, which is what is being done for seeds of grains, etc. Another is for the public to fund the research, as discussed in this article.