Econ Article Response 1

Econ Article Response 1 - records of their cotton...

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Anthony Cao Bing Chen Discussion Section 202 Chinese Take a Cotton to Hoarding Wall Street Journal – January 29 th , 2011 Chapter 3: Supply and Demand The primary focus of the article is on Chinese cotton farmers, and the growing concerns of many around the world regarding the volatility of cotton, in addition to other commodities. Chinese cotton farmers have been holding back a large supply of their harvested cotton in hopes of having the already-high prices of cotton climb even higher. They say that unless prices continue to rise, their sale of cotton will not cover their costs. Hence, many in China have been withholding their supplies of cotton from the market in hopes of continuing to raise the price. The article also mentions concerns worldwide regarding the market for cotton, because many countries in recent years have either not kept
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Unformatted text preview: records of their cotton imports/exports or have chosen not to publish them. Thus, many are concerned with the ambiguity of the current situation for the market for cotton. This article demonstrates a very clear supply and demand relationship. To cover their costs, producers (the cotton farmers) are keeping much of their cotton off of the market. Because demand has been increasing over the past few years, and the lack of cotton in the market decreases the supply, the price of cotton rises at every quantity. This, then, increases producer surplus, allowing the farmers to better pay for their costs of production. Hence, what we have learned in class in recent weeks regarding the nature of the supply and demand curves can be perfectly applied to the current situation of the cotton market in China....
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This note was uploaded on 11/28/2011 for the course ECON 102 taught by Professor Rossana during the Winter '08 term at University of Michigan.

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