Using the Data and Your Economic Knowledge, Evaluate Different Ways in Which the Government of a Country Which Imports Large Quantities of Wheat Can Try to Stabilise Wheat Prices Within the Country.

In: Business and Management

Submitted By DWAD1
Words 607
Pages 3
Using the data and your economic knowledge, evaluate different ways in which the government of a country which imports large quantities of wheat can try to stabilise wheat prices within the country. (25 marks)

Price stability is when prices in the economy don’t change or don’t change much over time. This means that an economy would not experience inflation or deflation. One of the ways in which the government could stabilise wheat princes is through a buffer stock intervention. This is an intervention system that aims to limit the fluctuations of the price of a commodity. Another way in which they could stabilise the price of wheat could be through imposing a price ceiling. A price ceiling is the price level in which the price of a good or service is not allowed to increase past.
Wheat is unstable predominantly due to the situation regarding it in Russia. This is because Russia, a major wheat explorer, banned exports of wheat in 2010. This was due to very dry weather and fires destroying a third of the Russian crop. Due to this wheat prices significantly increased in the summer of 2010. Furthermore the wheat market is unstable due to the emerging demand from developing countries such as India and China, thus having a domino effect on other countries. Due to this it has made the Russia situation more than it should have been. Although to combat this farmers have already planted more wheat, began to use less wheat to feed livestock and substituted cheaper grains in their place. Through this the market has reacted to the subtraction of the Russian wheat crop and in reaction has increased supply which stabilises the price of wheat. Yet this is only a short term solution as there could be other weather events in the coming years which will interrupt this equilibrium. This is where government intervention is needed to reassure and reaffirm the price of wheat for years…...

Similar Documents

Why Countries Trade

...International Trade Versus Interregional Trade ( international trade occurs for the same reasons as interregional trade ( gains from technology and gains from trade III. Trade in an Individual Product ( trade in cloth (U.S./India) — Figure 2.1 ( supply and demand ( the effects on India and the U.S. IV. Trade Based on Absolute Advantage A. Absolute Advantage ( PASSPORT: Football Games, Rats, and Economic Theory ( PASSPORT: Mercantilism ( Table 2.1 B. The Gains from Specialization and Trade with Absolute Advantage ( gains from trade — Table 2.2 ( the labor theory of value V. Trade Based on Comparative Advantage A. Comparative Advantage ( Table 2.3 ( David Ricardo ( Babe Ruth B. The Gains from Specialization and Trade with Comparative Advantage ( PASSPORT: Principal Exports of Selected Countries — Table 2.4 ( Change in world output — Table 2.5 VI. Trade Based on Opportunity Costs A. Opportunity Costs ( PASSPORT: Labor Costs as a Source of Comparative Advantage — Table 2.6 B. The Gains from Specialization and Trade with Opportunity Costs ( Table 2.7 ( Autarky VII. The Production Possibilities Frontier and Constant Costs A. The Production Possibilities Frontier — Table 2.8 B. Production......

Words: 10137 - Pages: 41

Wheat Price

...SPECIAL ARTICLE Wheat Price Inflation in Recent Times: Causes, Lessons and New Perspectives Sthanu R Nair, Leena Mary Eapen In this paper we demonstrate that the high level of wheat procurement during 2008-09 and 2009-10 at a higher minimum support price was necessitated by the difficult circumstances that the government faced, characterised by a precarious buffer stock position from 2005 to 2008. Hence, blaming larger procurement and a higher msp alone for the soaring wheat prices between 2008 and 2010 is an oversimplification of the problem. The experience with wheat procurement in the recent past suggests that foodgrain procurement at a lower msp may not always be feasible. Finally, it is shown that the inability of the government to utilise the abundant wheat stocks for the benefit of the consumers during the recent phase of high foodgrain prices was due to the poor offtake of the grain allotted to the states, not to the operations of private trade via the government’s open market sales window. 1 Introduction The issue of high inflation in food prices has been at the forefront of the economic policy debate in India for quite some time now. For the government and policymakers, in terms of identifying appropriate solutions no other domestic economic problem has proved to be as challenging as food inflation. Perhaps for the first time in recent history a sense of helplessness has settled over the government administration in resolving a key economic challenge......

Words: 9021 - Pages: 37

‘Choose a Destination (It Can Be Anything from a Single Resort, to an Entire Country), Describe the Economic, Cultural and Environmental Impacts Caused by Tourist Development There and Judge the Extent to Which the

...impacts of tourism development growth can produce both benefits and costs to the host nation. In order to eliminate the negativities caused by tourism, and provide a more sustainable future for the ever-expanding industry, Government’s need to be actively involved throughout. However, the extent of their involvement is disputed. The Government’s of such nations must try to develop initiatives that will not only carry on boosting their economy through the maturity of tourism, but sufficiently limit the damage to the environment, all whilst protecting their own nation’s cultures, and in doing so; creating a more sustainable future. The WTO (1993) defines sustainable tourism as ‘meeting the needs of the present tourists and host regions whilst protecting and enhancing opportunity for the future.’ It also illustrates that sustainable development strategies must stress the need for due regard to be given to the ‘long-term appropriate use of natural and human resources’. Essentially, in order to achieve sustainability in tourism, the long term effects and impacts need to be assessed over the mass market. By developing sustainable forms of tourism in some areas, other areas that may be affected as a result of this are simply ignored. As Klemm (1992) suggests, ‘the real challenge for the future it to provide sustainable tourism for the mass market’. As the mass market is not given enough consideration in the early development stages of a countries tourism industry, this often......

Words: 3356 - Pages: 14

As Economics

...mic AS ECONOMICS STUDY GUIDE UNIT ONE Markets: How They Work & Why They Fail For Edexcel Syllabus: updated 2010 CONTENTS Page Reading list 3 Syllabus 4 SECTION A – HOW THEY WORK 1. The Basic Economic Problem 8 2. Specialisation and the Division of Labour 10 3. Production Possibility Frontiers 12 4. Types of Economy 15 5. Positive & Normative Statements 18 6. Theory of Demand 19 7. Theory of Supply 21 8. Equilibrium/Market Clearing Price & Price Mechanism 23 9. Consumer and Producer Surplus 26 10. Price Elasticity of Demand 28 11. Price Elasticity of Demand and Revenue 30 12. Price Elasticity of Demand along Demand Curve 31 13. Cross Elasticity of Demand 32 14. Income Elasticity of Demand 33 15. Price Elasticity of Supply 34 16. Elasticity Summary 35 17. Indirect Taxes and Subsidies 38 18. Labour Markets 41 SECTION B – MARKET FAILURE 19. Market Failure 45 20. Externalities 46 21. Externalities Diagrams 47 22. Merit and Demerit Goods 49 23. Missing Market: Public Goods 51 24. Imperfect Market Information 53 25. Government Intervention to Correct Market Failure 55 26. Factor Immobility: Labour Market 60 27. Unstable......

Words: 15000 - Pages: 60

Analysis of the Factors Influencing the Quantity Imported of Common Wheat

...Managerial Economics Analysis of the factors influencing the quantity imported of common wheat Contents Introduction 3 Literature revue 3 Panos Konandreas, Peter Bushnell and Richard Green (1978) 4 Won W. Koo (1984) 5 Daniela Kopp and Iain Wallace (1990) 6 Franqois Ortalo-Magne and Barry K. Goodwin (1990) 7 William W. Wilson (1994) 10 James N. Barnes and Dennis A. Shields (1998) 11 S. D. Rozelle and J. Huang (1998) 14 Samarendu Mohanty and E. Wesley F. Peterson(1999) 15 M. Uzunoz and Y. Akcay (2009) 16 L. J. S. Baiyegunhi and A. M Sikhosana (2012) 18 Methodology and results 18 Explanation of coefficients: 27 Elasticity Analysis : 30 Conclusion 32 References 33 Appendices 35 Introduction Food habits vary in finction of countries and regions. In Morocco, the wheat production have reached 3400 million metric tons in 2012 ("Index mundi," ), which makes Morocco wheat production ranked in the 24th place, excluding EU. All over the world, people consumption of wheat has increased in the majority of countries. Wheat is more and more used in every meal. Due to its importance in the Moroccan alimentation, we decided to to conduct a study related to the imported quantity of common wheat. The objective of this study is to determine the factors influencing the quantity demanded of common wheat in......

Words: 7997 - Pages: 32


...advantage of the Chesbrough and Rosenbloom approach to the business model concept is that its functions or components provide a comprehensive structure by which to analyse different sources of value in firms. Compared for instance with Amit and Zott’s (2001) approach its functions or components are generic, rather than specific sources of value for a particular type of business. However the Chesbrough and Rosenbloom business model is still more of a framework than a theory (Teece 2006). By itself is does not enable predictions to be made of the behaviour of firms, although it has attempted to identify the key factors that may make such predictions possible. At the same time there are theoretical underpinnings that could be incorporated into many of the components of the business model to increase its capacity to be used as a predictive model. As with Amit and Zott’s (2001) development of the business model, this analysis suggests that there is no single applicable theoretical framework, but that an integration of the various theoretical frameworks is useful in examining the value creation potential of the firm’s business model. The approach adopted here is to enrich the concept of the business model with the various a series of theoretical concepts based on the theory of the firm. The principal theories are transaction cost economics (Williamson 1971, 1981, 1986), the resource based view (Wernerfelt 1984; Barney 1986, 1991; Deirickx and Cool 1989) and the relational view......

Words: 9884 - Pages: 40

Economics Past Papr

...Version 1 General Certificate of Education (A-level) January 2012 Economics (Specification 2140) Unit 1: Markets and Market Failure ECON1 Final Mark Scheme Mark schemes are prepared by the Principal Examiner and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all examiners participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the candidates’ responses to questions and that every examiner understands and applies it in the same correct way. As preparation for standardisation each examiner analyses a number of candidates’ scripts: alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, examiners encounter unusual answers which have not been raised they are required to refer these to the Principal Examiner. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of candidates’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this Mark Scheme are available from: Copyright © 2012......

Words: 6026 - Pages: 25

Assess the Effect of Three Factors Which May Limit Economic Development in Developing Countries

...the significance of three factors which might limit economic development in the developing countries. Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability. Primary product dependency occurs where production of primary products accounts for a large proportion of a country’s GDP. This can have a particularly limiting effect on economic development when a country’s primary product is what may be classified as a “soft commodity”, that is to say, agricultural goods mainly such as wheat, rice, palm oil etc. For example, Kenya has a high dependency on tea and horticulture. This may limit economic development for several reasons. Both supply and demand for primary products tend to be elastic thus and demand or supply-side shock would cause a relatively large price change, meaning that primary products are likely to experience extreme price fluctuations. These price fluctuations will cause fluctuations in producers’ income as demand is price inelastic. Therefore, a fall in price would cause a fall in total......

Words: 1997 - Pages: 8

Using the Data and Your Own Economic Knowledge, Evaluate the View That a Fair Distribution of Income Can Be Better Achieved by Policies Which Aim to Redistribute Income After It Is Earnt Rather Than by Policies Which

...they get. This is why the government intervenes and either redistributed the income in the forms of taxes and benefits or they use supply side policies to try and encourage people into higher earning jobs. Redistributing income can be done in several ways; it can be done through a progressive tax system, tax credits or wealth taxes or benefits. A system of progressive direct taxation can reduce income disparities and if combined with a high level of government spending on benefits can achieve income redistribution. In the UK the highest rate of income tax is 45% for those earning more than £150’000 and the lowest income tax rate is the ‘basic rate’ at 20% for earnings of £10’600 to £31’785. The problem that is caused for those taxed and those on benefits is the disincentive effect. Those on higher incomes may decide to work less so that they do not reach the next tax bracket, or take higher incomes in the form of other benefits. Those relying on benefits to live may be caught in the poverty trap as they are better off relying on benefits as they would be taxed too much if they got a job and started earning income themselves. The thinking behind this is that a dependency culture is created often between generations where living on benefits is acceptable. In order to combat this, those who take low paid jobs are rewarded with working tax credits, dependent on their family circumstances, which makes employment more attractive. However, the government is currently proposing to...

Words: 1207 - Pages: 5


...Economics Project Effect of Inflation on Household Budget Submitted by- Chander Prabh Jain (14109035) Vasu Singla (14109050) Vikrant Das (14109007) Arpit Dhiman (14109006) Dhruva Gupta (14109010) Branch-Production Contents Pg 3…………………………………………………………….Abstract Pg 4……………………………………………………………..What is inflation? Pg 4 – 6………………………………………………………….Types of inflation Pg 6 -7 ………………………………………………………….Causes of inflation Pg 8………………………………Measurement of inflation and issues encountered Pg 10-11……………………………………………………………Factors affecting demand Pg12 - 13……………………………………………………………..Factors affecting supply Pg 14-15………………………………………How Can Government Control Inflation? Pg 16-19…………………………………………………Effect of inflation on various sectors Pg20-21…………………………………………………………..Literature review Pg22-23………………………………………………Needs, Objectives and......

Words: 12694 - Pages: 51

International Economics

... INTERNATIONAL ECONOMICS 13th Edition Robert J. Carbaugh Professor of Economics Central Washington University Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit to search by ISBN#, author, title, or keyword for materials in your areas of interest. Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in...

Words: 334271 - Pages: 1338

Using Named Examples, Examine the Extent to Which the Development Gap Occurs Within Countries as Well as Globally.

...Using named examples, examine the extent to which the development gap occurs within countries as well as globally. 1) Introduction The development gap refers to the financial and social disparity between the poorest and wealthiest in society. Where economic indicators are low, social indicators are often also low, whereas the wealthiest countries also enjoy better healthcare and education. This gap has been widening for decades and is at its widest today. The poor are not necessarily getting poorer; in fact nearly everybody has seen an improvement in quality of life over the last 20 years. The reason the gap is widening is because the richest are getting richer and having their quality of life improve at a far quicker rate. 2) Between countries Globally the development gap is obvious to see, with both social and economic indicators showing the biggest differences between poorer LEDC’s and wealthy MEDC’s. Haiti is an example of a country with a very low GDP (just 12 Million dollars in 2015), compared to the USA’s 13 Trillion dollars. This gap represents the largest differences between standards of living in the world and the problem is made worse by war, corruption and intense poverty in other parts of the world. Countries like the USA have a strong economy because they have power and influence in the WTO and IMF and have engaged in the neo colonisation of many parts of the world through free market economy expansion, tied aid and becoming a global cultural......

Words: 746 - Pages: 3

Using the Data and Your Knowledge of Economics Assess the Arguments for and Against the Government Intervening in the Uk Electricity Industry. (25 Marks)

...should not have been privatised as they can never behave or perform like supermarkets.’ (Extract C, lines 15-16) Using the data and your knowledge of economics assess the arguments for and against the government intervening in the UK electricity industry. (25 marks) The big six energy firms effectively have an oligopoly on the UK energy market despite the existence of some smaller firms who are mainly involve in the retail aspect of the market (extract A). The market concentration of these firms and the significant profit margins that they enjoy, as referred to in extract B, would suggest that there exists a strong argument in favour of government intervention in order to protect consumer interest. However any government intervention must be based on sound information so as not to further disrupt the market and potentially result in government failure. Furthermore, if the energy companies’ claim of needing these supernormal profits for the purposes of future investment holds true the government would need to consider the long term implications of intervention such as windfall taxes. Firms in oligopolistic markets have market power and therefore can often use this power to act in an anti-competitive way which is damaging to consumer interests. Given their ability to set prices as oppose to ‘take’ them for the competitive market, the prices charged in these markets are......

Words: 1199 - Pages: 5

Using Economic Knowledge, Evaluate Different Ways in Which the Government of a Country Which Imports Large Quantities of Wheat Can Try to Stabilise Wheat Prices?

...Using economic knowledge, evaluate different ways in which the government of a country which imports large quantities of wheat can try to stabilise wheat prices? Stabilising wheat prices can be done through a buffer stocks scheme. This is when the government tries to stabilise a market/producer which is producing too little or too much (in the case) wheat. They would do this by buying back a lot of the wheat if it rose above or by giving out some they own in their stock pile to bring production up to the right amount if it dropped below the amount needed by the consumer. This is shown in the diagram below. Wheat Wheat During a good harvest where a larger quantity is produced at Q2 with the price at P2, the government has to intervene by buying some of the stock to enable the producers to return to the equilibrium point of (Q,P) where both the demand and price increase meaning its more profitable for the business than at point (Q2,P2) which is the main objective for a firm. At point (Q1,P1) because of the bad harvest, the price set by the producer is higher than the equilibrium to try and maintain its profits. Unfortunately consumers won’t buy a lot at this price so the government will supply the producers out of its stockpile which in this case is imported in large quantities to stabilise the market. This will mean producers can lower prices to attract more sales from consumers and in turn increase profits. Another way in which the Government which imports large......

Words: 499 - Pages: 2

E-Government in Developing Countries

...EJISDC (2004) 18, 1, 1-24 E – GOVERNMENT FOR DEVELOPING COUNTRIES: OPPORTUNITIES AND CHALLENGES Valentina (Dardha) Ndou Department of Business Administration University of Shkoder, Albania 1. INTRODUCTION The explosion of digital connectivity, the significant improvements in communication and information technologies and the enforced global competition are revolutionizing the way business is performed and the way organizations compete. A new, complex and rapidly changing economic order has emerged based on disruptive innovation, discontinuities, abrupt and seditious change. In this new landscape, knowledge constitutes the most important factor, while learning, which emerges through cooperation, together with the increased reliability and trust, is the most important process (Lundvall and Johnson, 1994). The competitive survival and ongoing sustenance of an organisation primarily depend on its ability to redefine and adopt continuously goals, purposes and its way of doing things (Malhotra, 2001). These trends suggest that private and public organizations have to reinvent themselves through ‘continuous non-linear innovation’ in order to sustain themselves and achieve strategic competitive advantage. The extant literature highlights the great potential of ICT tools for operational efficiency, cost reduction, quality of services, convenience, innovation and learning in private and public sectors. However, scholarly investigations have focused primarily on the...

Words: 11717 - Pages: 47