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Several factors are mentioned as contributing to disequilibrium in global food markets. Among them are emotions...

Several factors are mentioned as contributing to disequilibrium in global food markets. Among them are emotions (panic), government restrictions on trade, the Malthusian specter of population growth outpacing food production, slowing productivity growth in the agricultural sector, rising incomes, and the production of ethanol. Which of these are supply factors and which are demand factors? How does each influence market price?

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Expert Solution

emotions (panic) -Demand factor - Panic causes increase in demand which can increase market price

government restrictions on trade - Supply factor - Restrictions on free trade raise prices for sonsumers

the Malthusian specter of population growth outpacing food production- Demand factor- Higher population means more demand for food which means higher prices

slowing productivity growth in the agricultural sector -Supply factor - Slowing growth means that prices still reduce but at a lower rate(if productivity growth does not keep pace with inflation,then it could even lead to rise in prices)

rising incomes - Demand factor - More income means more demand increases the market price

the production of ethanol - Demand factor - Ethanol is also produced using crops which means demand rises which raises market price.

Rahul Sunny answered 2 years ago
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