Economics Essay

Economics Essay

Galina Haydar

MP4a

Economics

Ms. Erbé

Markets depend a lot on its customers. A market can only exist if buyers and sellers agree to exchange goods/services for a certain amount of money. In 2008, wheat prices rose and affected a lot of markets. Buyers and Sellers had to pay double the amount they used to for a good/product. Buyers had to limit their purchases due to increase in price. What was the problem and why exactly did wheat prices rise?

Markets are made by buyers and sellers. Demand varies according to what the buyers want or need. Demand is the amount of a good/service that will be bought at a given price over a certain amount of time. Supply is represented by the sellers. Supply is the amount of a good/service that sellers are willing to sell in a certain amount of time. When buyers want more of a certain product/service, demand will rise, therefore the market price would probably rise. On the other side prices will fall if demand does. Also if the supply of a product is increased by the seller, the product’s price is most likely going to fall, but if the supply is certain and there will be no more of that product, the price would rise.

The crisis was caused by bad growing conditions, high demand and partially because of huge demand for ethanol, causing farmers to plant more corn to produce fuel instead of growing wheat. Therefore a lot of sellers had to increase the prices of goods because they needed more money for the products used to produce a good. The prices of bread rose by 10 to 30 cents. Cereal and baked goods rose by 5.5 percent. Buyers might not agree with the price of goods, therefore no exchange of goods/services can be made. A lot of people were forced to shut down their shops due to this.

 This crisis affected a lot of countries. It spread around because everyone needs the wheat to produce but nobody has wheat to sell. Sellers had little to sell so prices all over the world increased. Poor people...