How markets work Flashcards
If demand increases…
prices rise to reduce demand
If supply decreases…
Prices rise to encourage supply
If supply increases or demand drops
prices fall, sending a signal to producers to reduce output or to consumers to increase demand
_____ is the invisible hand that matches supply and demand
Price
What would producers do if prices were high?
Produce more!
What would consumers do if prices were high?
Switch to another product - making demand match supply
____ is the backdrop against which changes in ____ play out.
Demand is the backdrop against which changes in Supply play out
Does demand change suddenly?
NO. it follows long term trends
What is a trend that would affect demand?
Population growth - as we get richer we eat out more leading to more demand and waste
What % of food goes to waste in USA?
40pc
how much is it for one person in pakistan to eat a year?
$415 - a fourth of what it costs in US This is however HALF the annual income of a person in pakistan
How much is it for one american to eat a year?
8pc of income for people in high income bracket - $11,000 annually.
36pc for average people, $3,655
Where is food cheapest?
India. $220 a year pp. just 25pc though of income.
Who spends a higher pc of income than US?
Sweden - 12pc, and Switzerland 11pc.
What were the riots 2005-08 mexico about?
white maize (corn) was so short which pushed prices too high
