Commodity prices can change very rapidly. The following article, taken from the Financial Times of 26 April 1996, considers the factors that led to some sharp commodity price rises at that time.
economics
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Commodity prices can change very rapidly. The following article, taken from the Financial Times of 26 April 1996, considers the factors that led to some sharp commodity price rises at that time. Read the article below on commodity prices to answer the following questions.
a) Why are commodities, such as grains, oil and metals, subject to large price fluctuations? Use the concept of elasticity in your answer.
b) Show, using demand and supply curves, the effects on the price of wheat of
(i) Falling world stocks of wheat
(ii) Poor weather
(iii) The ‘continued rise demand for grain’
Use a separate diagram for each.
