Key Concepts in Economics Accounting Assignment Paper - 1100 Words

Key Concepts in Economics Accounting Assignment Paper (Term Paper Sample) Content: Key Concepts of EconomicsStudents NameInstitutional AffiliationKey Concepts of EconomicsABC News captures the changes in wheat prices in the United States. The cost of the wheat bushel has risen hitting the highest level of $10 per bushel (Kirchhoff, n.d.). This is the highest price ever compared to previous periods. The prices of corn bushel have also increased to $4.39 compared to $3 way back in 2006 (Kirchhoff, n.d.). Every commodity has seen a rise in their prices including dairy, rice, and soybeans. The prices of bread, for example, will hike hence leading to low demand in the market. The entire challenge has been associated with various occurrence; severe weather in different exporting nations, such as Australia. There is also increase in demand for wheat in developing economies such as India and China. The U.S. land spaces have been more engaged in corn farming hence reducing the amount land allocated for wheat farming. This article presents various factors reg arding economic concepts. The case discusses about various recurrent challenges and effects on prices of related commodities.Imbalances in Demand and Supply of Wheat in the MarketReduction in supply has led to the price increase for the wheat bushel and its product components. Wheat shortage in the U.S. is based on the changes to the focus in the agricultural sector. The farmers are more focused on producing corn which is a raw material for ethanol. The process leads to the significant shortage in wheat supply as there has emerged competition within the export market. On that note, a strong dollar in the U.S. leads to an advantage on the weaker currencies, which have driven the prices down (FAO, 2016). This results in decreased demand for the export market leading to the excess of the product in the local market. The little wheat and its products that farmers are willing to sell in the export market have to meet the excess demand as many of them are facing the challenge of disposing it at deteriorating prices, which have hit 10-year lows (FAO, 2016). Where the number of buyers is more and goods available, it does not meet these demand leads to increase in price. Therefore, excess demand with low supply has resulted in continued growth in demand for the wheat products.Scarcity of ResourcesThe farmers have a challenge regarding land available for tilling. The space for cultivation for either crop is scarce making them farm on the better option. For instance, if maize will fetch a better price in the market, then the farmers decide to farm maize and forgo the wheat. It is due to scarcity that farmers have to make a choice to the farm of a given crop and not the other. In this case, such a parcel of land may not be enough for one to divide and farm both crops.Recurrent Costs and ImpactsIt is definite that the slight changes in the prices of wheat have led to immense deterioration of the economy. The prices of other products majorly retrieved from wheat have also r isen. CBC report has captured other products whose prices have increased with time; beef by 5%, dairy products by 5%, eggs and poultry by 3% and pork by 3% too (Schwartz, 2012). Changes in the price of a single product affect other products directly or indirectly.Supply and DemandSupply and demand forces shape the equilibrium market prices. The case of an increase in prices of wheat can well be described by using these two major concepts. In this case, the farmers have had to make a choice on what to produce based on costs and ease of producing. For instance, the land is scarce for farmers, and; hence they have to choose what to produce at a time. It is in this case, the farmers have had a shift of producing other products such as corn, thus destabilizing existing market prices, which can be explained by the concept of overabundance of wheat, which results in lowered prices for corn (FAO, 2016). In the case where more farmers decide to produce maize other than wheat, then its supply becomes minimal, thus destabilizing the market supply. According to California State University, low supply meets excess supply which then leads to higher price due to excess demand.Furthermore, an increase in demand in other rapidly developing economies like China and India is responsible for the shortage experienced by the USA (Kirchhoff, n.d.). The scarcity is, therefore, both internally and globally. The production is inadequate for the entire increasing population and demands. The world population is increasing which also has squeezed some resources on earth. The emergence of climate change is hitting the agricultural sector leading to stagnancy and low productions. The nations must come up with better technological advancement that will see them produce more and more wheat or any other product in need.Moreover, the USA have been receiving wheat exports from other countries, specifically Australia. However, the changes in weather conditions have altered productivity hence lea ding to small productions. Shortage about previous periods changes the normality of output and exports. When the product in supplied in limited amounts, the people are more willing to buy it at more costs. This is what pushed prices of wheat to the highest ever recorded in three decades. It is also quite definite that external environmental and weather conditions have an effect on the overall demand and supply circles and so to an economy of every nation.Effects of Supply and Demand Forces on the U.S. EconomyIf the prices are not stabilized in the United States for particular goods such as wheat, then it will affect the economy in the long run. For instance, a constant increase in the price of the commodit...