Davis K. Wheat in the Market Economy

Davis K. Wheat in the Market Economy - In a market economy,...

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In a market economy, prices allocate goods and services to the uses that individual buyers value most, according to what they are willing and able to pay for these goods and services. Wheat and rice account for much of the world food consumption of grains. Wheat is demanded for a variety of reasons, including producing bread and other food products for domestic use, for feed, and for export purposes. Wheat is a commodity in the global marketplace and some consumers demand this commodity to meet their needs in the consumption of food, or the creation of other goods or services. When the suppliers' unit input costs change, or when technological progress occurs, the supply curve shifts. For example, assume that someone invents a better way of growing wheat so that the cost of growing a given quantity of wheat decreases. Producers will be willing to supply more wheat at every price and this shifts the supply curve outward, which will have an increase in supply. This increase in supply causes the equilibrium price to decrease. The equilibrium
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