Consumers+restless+at+price+hike+by+Juneshin

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= __ Consumers restless at price hike __

=SOURCE:= http://www.koreatimes.co.kr/www/news/biz/2012/03/335_104651.html

=DATE EXTRACT WAS WRITTEN:= 2-12-2012

=DATE CURRENT EVENT WAS WRITTEN:= 3-26-12

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= World wide one of the most common fast food chain has raised the priced of a certain product at korea including Mc Muffin, BigMac and Americano Coffee. Most product showed the price increase of 200won, from the original product because the commodity producing the McDonald have increased. Over the short span of time period McDonald product product increase of 1.2% indicates the steady price also increased in other commodity. Due to the price incline the demand of the certain McDonald product was declined, however since it is only increase in few hundred wons the demand only changed slight amount of fallback. But some student this price increase effect significantly to their food budget. According to the economic theory, when the demand of a good or service decreases, the price of the good or service decrease, while the quantity supplied drops. Since the price of the product was increased the supply will also decreased. As a result, the quantity supplied of Mcdonald product will decrease, because the Law of Demand states that "as the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus," vice versa. This increase of the Mcdonald product not only shows simple price increasing, but also suggesting other commodity is also showing the growth in the price.

=VOCABULARY TERMS AND DEFINITIONS:= = =  Market- // A place or situation where buyers and sellers communicate with exchange in mind //

Supply- Willingness and ability for producers to produce a good at a given price over a given period of time

Demand-Quantity of a commodity that will be bought at a given period of time at a given price - what consumers are willing and able to buy at a price affects the demand for that good

Law of Supply-a higher quantity of a good will be supplied at a higher price

Law of Demand- states that as a price of good or service rises, the quantity demanded will fall; concurrently, if the price of a good or service falls, the quantity demanded will increase

Subsidy: a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive

Shortage: situation where the quantity available or supplied in a market falls short of the quantity demanded or required at a given time or price.

Low Price Control- governments sets a maximum price, blow the equilibrium price, which prevent producers from raising the price above. =DIAGRAMS:=

=EVALUATION:= The article suggest that the price of the McDonald is increasing at a steady pace, which is caused by the increase of product of commodity. The article also suggest the increased in price of other product due to the same reason. The government could possibly set a price controls to lower the price of the commodity to increase the demand. Since the price of the product is increased due to the increase in the increased price of commodity. By doing so the price could be lowered to price maximum and the quantity demand could be increased. But this will ultimately lead to the problem of excess demand, and shortage will happen. Hypothetically the government could decrease the quantity demand to solve this problem of shortage however it goes against the whole purpose. The other way to solve this problem is government could encourage the firms to produce more product to increase the quantity demand. This could be done by subsidizing the firms, or government could make more firms to produce the commodity. The last way is government might have stacked some commodity, this could be released to the market to increase quantity demand. However, this is highly unlikely.

But subsidizing the firms to encourage to produce more commodity can also have opportunity cost. Since the government is using the tax budget to subsidizing the industry to produce more, the government could possibly used the money in other occasions, in the investment of other sectors of infrastructure, such as health care or education.