In this article, I learned that Costco is looking for innovative ways to increase the supply for its organic food in respond to the popular demand for organic food in their stores. In the last few years, organic foods have increased significantly by double-digit and in the next three years, the Organic Trade Association predicted the sales for organic good will increase by 12 to 15 percent annually. However, as the demand for organic food grows, there are limited supplies which cause the price of organic foods to increase. In order to keep up with the growing demand for organic foods and offer their products at a competitive price, Costco is planning to expand its initiative and work with farmers to help them buy land and equipment to increase their organic output. With …show more content…
Economic analysis: In Chapter 3, the section focused primarily on the interaction of demand and supply and the effects of changes in demand and supply on equilibrium price and quantity. In the case of organic foods, the strong demand for organic foods has increased over the last three years and will continue to rise in the next few years. However, the farmers cannot easily keep pace with the high demand due to the timely process and costly fees that come with growing organic food. Nevertheless, Costco strategy to invest more in organic food and fund the farmers to buy land and equipment will create large revenues for the company as they are able to provide their consumers their products at a competitive price. Supply shifts could be a result of external