L13

Question 1

Difference between 2005 and 2008 in poverty

Answer 1

2005 declined prices caused poverty - no one cared
2007 a big increase in food prices starts
Rest of world starts carying
High prices treatening poverty

Question 2

The impact on food changes depends on

Answer 2

Net trade/consumption status of household/country

If households are buying or selling food most

Question 3

What causes price changes?

Answer 3

Local changes

Exogenous shocks by nature or men

Question 4

Difference price changes short and long run

Answer 4

In long-run can adapt both for producers and consumers
However, this does not change that:
When price increase producers win and consumers lose
Size of effects depends on net benefit of price changes

Question 5

Political economy explainations

Answer 5

Relative income effect (Target market or government as a source of income, If things go well people do not need the government)
Political organization costs effect
(When urban population get hit by prices they can organize and protest
The budget and attention of policy makers will be stronger for groups that have relatively lower organization costs)
Media effect
(Media reacts on shocks which create disproportionate media attention
Media responds much less to long-term trends
Makes policy makers to act
Media response is much stronger than what actually happens
Increase in food price gives extreme media response)

Question 6

Urban bias

Answer 6

Lower organization and communication costs of urban consumers disproportionately influence not just domestic but also global decisionmakers