Consumer+Prices+Rise+0.4%+in+April+-+Aria+Tedjarati

http://www.marketwatch.com/story/consumer-prices-rise-04-in-april-2011-05-13
 * Source:** Market Watch
 * Date read:** 5-15-2011
 * Article written date:** 5-13-2011

By the end of April 2011, many economic factors that will soon lead to devastating changes in human society are evident. First of all, the cost of living, which is also known as the consumer price index, has risen 0.4% over the past month alone, and over 3.2% over the last 12 months. This is an incredible factor in the lifestyle of some people. The article describes some of the factors that lead to the increase in the consumer price index. The biggest factor that took up the bulk of the blame for the increase in the consumer price index is surging oil prices, and the overwhelming energy prices. Oil prices have increased by a devastating 33% in the past 12 months, and energy prices have leaped a massive 19% in the past 12 months. Food prices have also surged 0.4% in the past month, and 3.2% over the last 12 months. Thus, we can see that these surging prices would definitely have an impact on the consumer price index. Since the supply of gas, oil, and fossil fuels is very limited and is depleting very fast (earth does not have enough natural resources), the supply for these things decreases, thus increasing the new equilibrium price and decreasing the new equilibrium quantity demanded. Furthermore, these goods (especially food) are generally inelastic goods, meaning that the change in quantity demanded of the products are proportionately smaller to the change in price of the products, since these goods are necessary in everyday life (everyone needs food, everyone needs gas to fill up their cars to go to work, everyone needs energy to light up their house and to cook, etc). Thus, the consumer needs to adjust to these changes in price and learn to accept them since they are necessary goods, thus increasing the cost of living (consumer price index). It has also been mentioned that the hourly wages that people receive in America have dropped 1.2% in the past 12 months due to changes in inflation, thus creating an even worse financial situation for the average American.
 * Summary:**


 * Vocabulary:**
 * Supply: **The entire relationship between the quantity supplied of a good or service and its price.**
 * Supply Curve: **A graph showing the relationship between the quantity supplied and the price of a good or service, holding everything else constant.**
 * Demand: **The entire relationship between the quantity demanded of a good or service and its price.**
 * Demand Curve: **A graph showing the relationship between the quantity demanded and the price of a good or service, holding everything else constant**
 * **Equilibrium: When quantity supplied matches quantity demanded at equilibrium.**
 * **Shifts on Curve for Supply Curve: a shift to left or right is made to match the quantity demanded.**
 * **Elasticity: The measure of how the quantity demanded for a product changes with a change in the price of the product.**
 * **Inelastic demand: When the change in quantity demanded for a product is proportionately less than the change in the price of the product.**
 * **Inflation: A general increase in prices and fall in the purchasing value of money.**

The overall tone of the article suggests that the author does not believe that these changes in the economy will be such a big deal. However, I feel otherwise. Sooner or later mankind will have to come face to face with the fact that the earth's natural resources are depleting and will eventually be nonexistent. Thus, we must start acting now. The governments all around the world must work together to find a good alternative energy source, such as solar power, because if they do not do so, sooner or later gas prices will be so high that people will not be able to own cars anymore. Furthermore, their cost of living will go up and economic development may even decline. Certainly there will be a decrease in economic growth and another recession or maybe even a depression may outbreak. Apart from that, the government also needs to fix its food problems. I personally think that the "experts" who believe that this is not so much a big deal may be wrong this time, because thousands of poor people can no longer afford food. From my point of view, I see that there are multiple solutions to this major problem. First of all, the earth's population is too large to be supported with the food needed per capita, henceforth a solution to the food crisis would be to restrict the family size by enforcing a "one -child policy" such as China has done. Countries should also work together to create commodity agreements for the production of food so that everyone is able to purchase the food that they need. Governments should also distribute condoms and invest in education so that people do not accidentally create "more mouths to feed." Furthermore, all governments must try their best to control their inflation rate, because this would deplete people's hourly wages over time. Overall, governments all around the world must act fast before a major crisis occurs.
 * Graph:**
 * Evaluation:**