Thursday, December 26, 2013

Sugar Prices and Supply Changes

The Wall Street Journal reports that sugar prices are falling; and the reason is supply and demand.  Producers such as Brazil and Thailand are likely to have increased supply of sugar this year which is resulting in a decrease in sugar prices.  Economically we would say that the supply curve for sugar is shifting to the right, which results in the equilibrium price to fall assuming that demand remains constant (or at least increases less than the increase in supply).

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