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Analyze a recent article in on a microeconomic issue concerning a specific market where there was a price change and briefly summarize the article indicating the factors that led to the price change and draw the graphs supporting your economic analysis - Essay Example

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The price of the white bread in the U.S continuously keeps recording increase with much of the reasons behind the growth attributed to changes in climatic change. For over the last one century, changes in climatic change globally continue to affect the production of wheat that…
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Analyze a recent article in on a microeconomic issue concerning a specific market where there was a price change and briefly summarize the article indicating the factors that led to the price change and draw the graphs supporting your economic analysis
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The Rising Price of Bread in the U.S The Rising Price of Bread in the U.S The price of the white bread in the U.S continuously keeps recording increase with much of the reasons behind the growth attributed to changes in climatic change. For over the last one century, changes in climatic change globally continue to affect the production of wheat that in return affects the price of bread. The rise in climatic change recorded over the past one century signifies an increase of more than 0.6 degrees Celsius with new predictions by the intergovernmental panel that deals with climate predictions signifying presenting a prediction of an additional rise in climatic change of around two to four degrees Celsius by year 2100. The continuous climatic challenge impacts the food industry with the bread and other food products receiving the impact of the challenge. A current study further shows the validity of the concern signifying that the increasing temperatures will mostly lead to a decline in global wheat crop production (Covello, 2011). The specifics provided by the study indicate for a single degree Celsius increase in climatic change, the percentage of wheat crop lost stands at six percent. The increased temperature change serves as the cause of the increased price of bread in the U.S and signs of further increase in the near future remain evident.
The increased price in bread possesses significant impact on the demand of the commodity with the demand decreasing over time as prices increase. An assessment of the effects of increased temperature rise on the impact on wheat production remains ongoing for the past two decades with wheat comprising of a significant twenty percent of the total calories consumed globally. The decrease in wheat production holds negative impact on bread consumption and the overall food production (Mill, 2012). In general economics, it is expected that whenever the price of a commodity increases, the demand for that commodity declines especially in situations where there exists substitute goods. The continuous increased price of wheat therefore, affects the price of bread considering that the sale occurs in a perfect competitive market with different competitors offering the same product. The significance of increased prices is evident with players in the market already quoting the challenges they experience in terms of reduced profits from as a result of increased production costs and reduced purchase of the commodity. The graphical representation below shows the price changes of bread from 1981 to 2011in terms of dollars with the current price of white bread in the U.S averaging around $1.41 indicating continuous increment (Steve. (2012).
In conclusion, considering the ongoing drought in the U.S especially in Chicago region, signs of increasing bread prices within the U.S remain evident. The signs of bread price increment will also remain evident across the globe owing to continuous wheat price rise. Addressing the issue will require utilization of effective measures that will ensure the challenge of draught is put to an end. A study conducted by Nebraksha-Lincoln University found out that there is a need to change the processes of growing grain crops with wheat among the crops (Kiessel, 2015). The changes will include planting crop rows closer to each other as well as ensuring better weed together with pest control that holds the potential of leading to sustainable production and increase in production of around ten percent to twenty percent. Effective wheat crop management that include sowing as well as irrigation also presents essential measures in ensuring increased production. An increase in wheat production will eventually lead to reduced costs and stability in bread price.
References
Covello, L. (2011, May 5). 10 Everyday Grocery Items: Now and Then | Fox Business. Retrieved from http://www.foxbusiness.com/personal-finance/2011/05/05/10-everyday-grocery-items/
Kiessel, L. (2015, February 13). The Price of Bread Will Keep Rising With Increased Climate Change - MainStreet. Retrieved from https://www.mainstreet.com/article/the-price-of-bread-will-keep-rising-with-increased-climate-change
Mill, R. G. (2012, August 15). Bread price set to rise thanks to US drought. Retrieved from http://www.smh.com.au/environment/water-issues/bread-price-set-to-rise-thanks-to-us-drought-20120814-246tr.html
Steve. (2012, December 28). Our Current Price Basket of Goods, Services and Cost Of Living. Retrieved from http://www.thepeoplehistory.com/pricebasket.html Read More
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