Economic demand supply
Based on the article titled “Argentine bread prices keep rising as grain scarcity kicks in” as my analysis topic regarding of change in supply or demand, changing in equilibrium. The article that I choose was from United Press International (PUP)’s website which is http://www. Pup. Com/ and it was published on Tuesday, October. 29, 2013. Based on the article, it shows that the price of bread increase due to the scarcity of wheat which is the main source of making bread.
Figure 1 Figure 1 shows that the E is initial market equilibrium, the equilibrium price is POP ND the equilibrium quantity is CO. Suppose that decrease in supply shifts the supply curve from SO to SSL . Given that the new supply curve SSL, the quantity supplied by producers at the initial market price POP decrease from CO to IQ . Because the quantity supplied by producers at POP is smaller than the quantity demanded by consumers at POP, a shortage develops at POP. The shortage cause consumer to bid up the market price. As market price increase, the quantity demanded, Sq, decrease along DO and the quantity supply, Sq, increase along SSL .
The quantity demanded, Sq entities to decrease
Need essay sample on "Economic demand supply"? We will write a custom essay sample specifically for you for only $ 13.90/page
Unfavorable weather conditions will lead to a poorer harvest, lower yields and therefore a decrease in supply. Changes in weather condition can therefore have an effect on prices for agricultural goods such as wheat. Because these commodities are often used as ingredients in the production of other products, a change in the supply of one can affect the supply and price of another product. Higher wheat prices for example can lead to an increase in the price of bread as we see in the article.