Supply, Demand, and Price Elasticity

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Supply, Demand, and Price Elasticity Paper – Rice.
ECO / 212: Principle of Economics
Week 2 Learning Team Assignment

With the growing cultural diversity in the San Francisco bay area, it is hard not to notice the Asian cuisines and restaurants in every corner of the block. Asian food had become a natural substitution choice for the American fast food; and rice, is the perfect substitution for wheat and flour. Rice is the seed of the monocot plant “Oryza sativa”. As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East and South Asia, the Middle East, Latin America, and the West Indies. It is the grain with the second-highest worldwide production after corn. In this paper, we will evaluate the cause and effects of rice’s supply, demand, price elasticity, and market equilibrium point. Some of the major rice providers, like Thailand and China supply the world with rice. In order for a place to grow rice, it would require a lot of water and moisture like humidity (Workman, Daniel). If that country were to encounter a drought, like a major heat wave, it would require more maintenance for the crop to grow. Also, it can destroy the crop making it non-harvestable. If a crop is non- harvestable, with the money put into it, it would be a 100% loss. More heat equals more water needed to keep the crop on its growth cycle and more maintenance equals more money in labor. The amount of investment has direct relationship to the price of the rice. If there is less rice harvested because of a drought, the less supply there will be. If the demand stays constant, then the shortage of supply will result in an increase in price. In the other hand, when there are surplus of supply and demand is constant, there will be a decrease in price. If the supply is constant and the demand is changing, the price will also be affected where more demand creates shortage, and less demand creates surplus. Shortage will...
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