Economic analysis Essay Example | Topics and Well Written Essays - 1000 words

Economic abbreviation - Essay ExampleIn normal circumstances, keeping other things constant (ceteris paribus), as the take in rises (the run is held constant), the impairment of the good also increases. This is because as the demand for a good rises, the willingness and the ability of the buyers to buy rises. As a result, buyers are willing to buy more, and hence the price of the good rises. This derriere be shown in the diagram that is drawn below.From Figure 2.1 it can be seen that as demand rises (due to some exogenous variable), the demand curve shifts to the right (from AB to CD). The supply is fixed and so the new equilibrium is F quite of E that was initially the equilibrium. Since the supply is fixed it can be seen that the prices break risen from P1 to P2, such that P1In the article, Erica Olsen, the marketing specialist for North Dakota Wheat Commission states that the prices of durum throughout the year 2009 have not been changed. In fact they have remained in a ran ge of $4 to $ 4.20, so that the norm price is $ 4.10.2 She states that the demand for durum has increased worldwide and so has increased the exports of America. The estimated number of exports was reported as 838000 bushels in the year 2009.3 Normally, this increased number of exports may lead to a shortage of durum in the domestic country. Consequently, the prices may increase more as the supply falls to the left (there is a shortage). This phenomenon can be seen in the figure below.In the figure, the demand is already high. With an increase in exports the supply in the domestic market should fall. (The supply curve should shift from UX to YZ). The equilibrium should shift to G from E. Hence the price should increase more, this time to P3 where P3 P2. However this is not what was observed in