Impact of Food Prices on Demand and Supply

This economics assignment analyzes the relationship between food prices, demand, and supply. It examines a World Bank report highlighting how poverty-driven decreased demand led to lower global food prices. The assignment then explains how this price decrease stimulated supply due to increased purchasing power for consumers, ultimately contributing to economic growth and stability. A diagram (Figure 1) illustrates the impact of lowering food prices on supply and demand.

Running head: INTRODUCTION TO ECONOMICS
INTRODUCTION TO ECONOMICS
Name of the student
Name of the university
Author note

1INTRODUCTION TO ECONOMICS
Topic- Global food prices falls, demand decreases, supply improves-world bank-
Economics deals with two broad categories demand and supply of economic resources and
services with an aim of earning profit. Demand is the willingness or the wants and necessities
made by the consumers or the customers. It means the willingness to purchase a commodity in
exchange of money at a place called market (Alston and Okrent 2017). It includes the factors of
price and quantity. Law of demand says that with the rise in price creates less demand, on the
other side fall in price will create more demand and purchasing power for the product.
Supply on the other side means the fulfilling of those wants and willingness made by the
consumers or the customers. Due to good weather condition, supply rises with good production.
Supply depends on market factors, technology, and production unit and price factor. According
the supply law, Supply rises with the rise in price and quantity (Thirlwall and Pacheco-López
2017).
As per World Bank report, Due to poverty, there was fall in the demand for the purchase of food,
global food prices decline. As a result, supply increase as the decrease in price created more
purchasing for the product. Consumer will not purchase those products that consist of high rates
compared to market value. As it is poverty ridden, therefore by lowering the price on wheat,
corn there will be strong rise in the demand for that product, due to which economy achieves
growth and stability.

2INTRODUCTION TO ECONOMICS
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Figure1: Impact of lowering food prices on supply with addition to fall in demand due to
poverty
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3INTRODUCTION TO ECONOMICS
References
Alston, J.M. and Okrent, A.M., 2017. Introduction. In The Effects of Farm and Food Policy on
Obesity in the United States (pp. 1-12). Palgrave Macmillan, New York.
Thirlwall, A.P. and Pacheco-López, P., 2017. Economics of development: theory and evidence.
Springer.