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Chakra Saranathan

AP Macro Economics


October 6, 2010

Assignment #1

1. Name one factor that is causing the price of wheat to rise.


One factor that is causing the price of wheat to rise is the Russian

ban on the export of grain products. The reason that Russia has

resorted to this ban is because of the environmental conditions

occurring in Russia. Russia has been suffering from wildfires and

severe droughts that have destroyed 1/5 of its crop. The Russian

prime minister has placed this ban so that the Russian economy

could provide the people of Russia with the basic foodstuffs they

need. However this ban, has affected much of the countries around

the world. Russia being a major exporter of grain through the world

has completely stopped sending grain due to the wildfires and this

has caused a huge problem. An increase in the demand for wheat

and a decrease in the supply have led to the price of wheat being

raised. The price of wheat is currently on the rise.

3. Expectations play a significant part in the wheat market. Since

wheat is an essential crop that is used in many foods we consume,

the demand is very high for this crop. Unfortunately due to the

wildfires that plagued Russia’s wheat production, Russia has set a

ban on their export of wheat. Since Russia is the world’s number

one producer of wheat, the quantity supplied is less than the

excessive demand for wheat. This now has left a shortage of supply

for the people.

4. Two products that I utilize, that may be on the rise due to wheat
are wheat pasta and breakfast cereal. The reason that the prices of

these two products are going to rise is because wheat is used to

make these items, and if the wheat supply is short and the price is

rising, then the price for these two items as a result will definitely

rise as well.


6. The top 5 wheat-producing countries are China, The United

States, India, Russia and France.

7. Two countries that import wheat are Spain and Brazil.

8. A bumper crop refers to a particularly productive harvest yield for

a particular crop.

10. I feel that the U.S government should not ban the export of

wheat from our country. The United States being the third largest

wheat producer in the world has a major impact on the worlds

wheat industry and it is imperative that the United States continues

to supply countries with wheat. If we did have a ban on exporting

from this country, then we would end up in a wheat surplus due to

the amount of wheat we produce. The United States has 9.1% of the

world’s wheat production and if they only supplied wheat to the

people in the United States then we would definitely have a surplus

of wheat. For this reason we should not have a ban on the

exportation of wheat because it benefits our economy by

distributing wheat to other countries.