1 - Unstable Markets And Price Volatility Flashcards
(6 cards)
1
Q
What are unstable markets?
A
Markets that have features that mean price may be too high, too low or too volatile to achieve good outcome for social welfare
2
Q
Causes of price volatility
A
- price inelastic demand
- price inelastic supply
- time lags
- speculation
3
Q
Causes of price instability
A
Key factors influencing demand
- globalisation
- urbanisation
- industrialisation
- political events and pandemics
ST influences
- speculation
- fluctuating IR and ER
Cyclical factors influencing demand
- global demand during boom vs demand during recession
Key factors affecting supply
- climate change
- unpredictable weather
- natural disasters
Political events and pandemics
4
Q
Problems with price volatility for consumers
A
- unpredictable food and energy prices
- reduces confidence
- may cause poverty when rapid price rise
5
Q
Problems with price volatility for producers
A
- unpredictable incomes
- may be forced to leave when prices low, possible shortages
- reduce investment and innovation, lower confidence
6
Q
Examples of price volatile markets
A
- oil and energy
- agriculture
- livestock + meat
- industrial and precious metals
- fertilisers
