Discuss about the Introduction to Economics for Global Food Prices.
Global food prices falls, demand decreases, supply improves-world bank
Economics deals with two broad categories demand and supply of economic resources and services with an aim of earning profit. Demand is the willingness or the wants and necessities made by the consumers or the customers. It means the willingness to purchase a commodity in exchange of money at a place called market (Alston and Okrent 2017). It includes the factors of price and quantity. Law of demand says that with the rise in price creates less demand, on the other side fall in price will create more demand and purchasing power for the product.
Supply on the other side means the fulfilling of those wants and willingness made by the consumers or the customers. Due to good weather condition, supply rises with good production. Supply depends on market factors, technology, and production unit and price factor. According the supply law, Supply rises with the rise in price and quantity (Thirlwall and Pacheco-López 2017).
As per World Bank report, Due to poverty, there was fall in the demand for the purchase of food, global food prices decline. As a result, supply increase as the decrease in price created more purchasing for the product. Consumer will not purchase those products that consist of high rates compared to market value. As it is poverty ridden, therefore by lowering the price on wheat, corn there will be strong rise in the demand for that product, due to which economy achieves growth and stability.
Figure1: Impact of lowering food prices on supply with addition to fall in demand due to poverty
Alston, J.M. and Okrent, A.M., 2017. Introduction. In The Effects of Farm and Food Policy on Obesity in the United States (pp. 1-12). Palgrave Macmillan, New York.
Thirlwall, A.P. and Pacheco-López, P., 2017. Economics of development: theory and evidence. Springer.