Economics Paper Essay

1 Define the term equilibrium priceThe price at which quantity demanded by consumers and the quantity of goods and function supplied by firms is the same.3 With the help of an appropriate diagram and the information in extract B, explain wherefore the world price of saccharify changed in 2009The price of sugar 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 capital of the United Kingdom rose by 52% to its highest in almost three years. The diagram below shows how the inward shift of bestow caused by poor harvesting home harvests and Indias %40 fall in fruit of sugar affected the price of sugar receivable to its scarcity, leading to the %52 rise in price of sugar.Another factor that could have had an effect on the price of sugar would have been in 2008 there were poor pare 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 something to do with the land quality this may have affected the harvest in 2009. preparation constraints similarly had an effect, as due heavy rainfall the Columbian crop was damaged the rain also washed a vogue 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 expect to fall by %40 so only 15million tonnes of sugar would have been produced in the growing sequence this is well below Indias sugar consumption of 23million tonnes a year. This would mean that India wouldnt be be 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 likel y be a rise in sugar price in India the people may not be willing or able 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.