AS Economics homework

Read this article from the Guardian .




Extract: "The price of sugar on global commodity markets has doubled since the beginning of the year and is close to a 28-year high as hedge funds and speculators jostle to bet on the possibility of an international shortage of the world's favourite natural sweetener.

For financiers seeking adrenaline-driven price lurches, sugar has become the new oil. Historically, raw sugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price briefly touched 24.85 cents last month, its highest since 1981, and sugar is now hovering around the 23 cent mark."

In your blog (but linking to the article)

a) Explain the 2 factors that have lead to a decrease in the supply of raw sugar

b) Explain what has happened to the demand for sugar

c) Using your answers to a) and b) and a diagram, explain what has happened to the sugar market

d) Define price elasticity of supply

e) Given the 2 statements below, discuss whether the price elasticity of supply will be elastic or inelastic

"The sugar available now is dependent upon the sugar planted last year":

"Stockpiles of sugar are available"

f) Define price elasticity of demand

g) Do you believe the price elasticity of demand for sugar to be elastic or inelastic? Explain your reasoning