Economics Paper Essay Example for Free

Economics Paper Essay1 Define the term equilibrium priceThe price at which quantity demanded by consumers and the quantity of goods and services supplied by firms is the same.3 With the help of an appropriate diagram and the information in extract B, explain why the world price of sweeten changed in 2009The price of peag rose to $0.40 per kilo in 2009 this is shown in the extract as it states that in 2009 prices in New York and London rose by 52% to its highest in al virtually three years. The diagram below shows how the inward shift of cede caused by poor crop growths and Indias %40 pickpocket in output of sugar affected the price of sugar due to its scarcity, leading to the %52 face lifting in price of sugar.Another factor that could film had an effect on the price of sugar would have been in 2008 there were poor crop harvests that year this led to a low level of supply in 2008 which raised the price of sugar due to its scarcity. This poor harvest would have had nig hthing to do with the land quality this may have affected the harvest in 2009.Supply constraints also had an effect, as due heavy rainfall the Columbian crop was damaged the rain also washed away some of the roads used to transport the products from the field to the market. So whatever crop the farmers managed to save from the rain was then prevented from reaching market, this would have contributed to the price rise in a way similar to the diagram above.India is a main producer of sugar, so much so that its sugar output is a critical factor in determining the world price of sugar. Indias output was forecast to fall by %40 so only 15million tonnes of sugar would have been produced in the growing season this is well below Indias sugar consumption of 23million tonnes a year. This would mean that India wouldnt be inclined to export much of its sugar as theres already a deficit of supply in its own country. Although, with this large fall in supply therell most likely be a rise in suga r price in India the people may not be willing or satisfactory to pay the new price so whatever amount of sugar is leftover could be exported, at a price which would lead to the %52 rise in London and New York sugar prices.