Economic100 Essay Example | Topics and Well Written Essays - 1250 words

Economic100 - Essay Example Their portfolio ‘also includes some of the nation’s fastest growing beer brands, such as Hahn Super Dry and Boag’s Draught, and the leading light beer, Hahn Premium Light’ (Lion Nathan 2010). Lion Nathan appears to be in big trouble at the time this article was written and is facing severe supply issues. The strike occurred at Lion Nathan’s factories as a result of a dispute on pay rises. Brewery technicians at the beer giants western Sydney factory began ‘a week of strike action aimed at starving the amount of beer the company can supply over the peak summer period. The factory, which has been at the Lidcombe site since 1978, produces all of Tooheys beer - about 3.3 million hectolitres each year. Brewery technicians make up 84 of about 1100 of the brewerys workers but oversee the recipes and ingredients. The technicians are calling for a 4.5 per cent pay rise and say a 3 per cent offer from Tooheys parent company Lion Nathan is unfair.’ (Hills 2010). The first economic issue in this situation is that there are fewer players in the market. Lion Nathan seems to dominate the market, with a 43% share of the market in 2007 (Hills 2010). This signifies that beer production is a market in Australia which is largely an oligopolistic structure with few large players controlling the supplies. This not only means that the large players control the prices but also that the supply is largely inelastic. With the inelastic supplies, a shift in the demand curve could have a greater impact on the price than if the supply was elastic. The supply is the willingness of the producers to supply to the market at a particular market price. This supply curve is affected by the cost of production among several other factors. In the case of beer manufacturers in Australia, this cost of production has gone up which means that the supply