• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Commentary on News Article

Extracts from this document...


COMMENTARY COVERSHEET Economics commentary number: (circle) SL: Practice 1 2 3 4 Title of extract: Biofuel demand makes food expensive Source of extract: BBC News, Chicago, http://news.bbc.co.uk/2/hi/business/6481029.stm Date of extract: 23 March 2007 Word count: 830 words of commentary Date the commentary was written: 20/01/2009 Commentary relates to these syllabus sections: Section(s) 1 2 3 4 5 Candidate name: Aleksandar Stupar Candidate number: n/a Commentary The article above talks about the increasing demand of corn, because more and more companies that are producing ethanol are demanding corn; since it has been discovered that corn can be used to produce biofuels, such as ethanol. However, this raising corn demand has had also a negative effect, as people who regularly used corn can not afford it's price anymore. There are many determinants which are now affecting the demand of corn, these include prices, rent, multiple uses, and preferences. The prices of corn have now gone higher then they were before, even for normal daily products where corn is involved. For example, now that corn is in high demand the prices on products such as "tortillas" mentioned in the article have gone up. ...read more.


As mentioned before, corn has been used for example to make cereals, animal food, and other things; now, an increase in price will be translated as an increase in the production of such goods that use corn (cereals...etc). (Price of corn rises =costs rise=quantity falls) Thus we have the situation represented in the graph above, as the price rises, the quantity demanded is no longer the same, but it is smaller. For example, if somebody were selling orange juice, and on a really hot day 200 people were wanting orange juice that person can make the price higher, from 1 dollar to 1.5 dollars, now he will have perhaps 150 people, and thus he can decide to make it higher again to 2 dollars, now he will have perhaps 100 people, but he will make a profit even though he needs to squeeze oranges for 100 people. However, it must be considered that as technology improves costs go down, thus we obtain the graph above, which shows us that when costs go down the quantity demanded increases. This means that the rise of corn prices stated above can become favourable once again, by the improvements in technology. ...read more.


And food companies are warning that high corn prices will feed through to everyone's grocery bills. In Mexico, there have been street demonstrations about the rising cost of tortillas, which are made from corn. And rising food costs are unlikely to be the only impact of biofuel refineries buying into the corn market. In places like Illinois, the price of agricultural land has started to rise. That will eventually feed into the cost of other agricultural commodities. Sam Martin puts it succinctly. "I think that cheap food is history," he says. Perverse consequences This trade-off between greener fuels and higher food prices is one of several difficult issues thrown up by the rapid development of the biofuels industry. The world has already witnessed the absurdity of virgin rainforests in Asia being torn down to make way for palm oil plantations. Palm oil, like corn, has become hugely profitable because of demand from biofuel producers. But the environmental benefits of the biofuels are outweighed by the loss of the rainforests. Biofuels can make a contribution to reducing greenhouse gas emissions. But the processes by which they are produced need to be kept under constant review to make sure that they do not have perverse consequences. And that includes forcing up the price of essential foods. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Commentary on Indian News Article "Food prices push inflation to 6.95%"

    an impact on the whole economy, as food is a necessity for everyone. In theory, there are two macroeconomic policies designed to decrease and influence the inflation rate. The inflation rate, mentioned in the article in India is at 6.95%.

  2. Free essay

    Economic Article Commentary - The five biggest supermarkets in the UK are accused of ...

    That is why I had to read the article three times before I could find a real story in it. And after that I really liked the article, because now I could see what effect the falling down of the housing market in the USA had on the housing market in Western Europe.

  1. Wheat Commentary

    try to shift the demand curve left. The demand (the quantity of goods and services that consumers are willing and able to buy at all prices, for a given time period, ceteris paribus)2 for wheat has been going up, but due to the supply shock (in unplanned change in supply

  2. Econ Commentary I

    With this extra money, incomes change and go up. Income is one of the main factors of consumption because, when it rises, people have more money to spend on other things, which increases aggregate demand.

  1. Eco commentary

    The above diagram is an example of cartel, OPEC, where many firms colluding together have a very low (average total cost). In 1970 OPEC 'S prices even crossed $100, the box above (PabC)

  2. Economics Commentary

    decrease in quantity demanded from Q1 TO Q2. However, through the article we can discern that during this holiday period of Idul Fitri, the demand for this service is extremely high and has become relatively inelastic, "the higher fares were not discouraging people from flying."

  1. Wealth Doesnt Require Morals

    This tragic event shook society up. The New Deal, headed by F.D.R, gave a complex package of economic programs that helped stimulate the economy and input restrictions or precautionary measures on the economy for the future; for example, the Securities and Exchange Commission.

  2. Economics Commentary

    With other words, the market becomes less competitive and more monopolistic. The CAAC tries to prevent this in order to keep the air business competitive. Options are price floors, as will be explained later.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work