Increasing+cabbage+prices+may+lead+to+new+kimchi+crisis+by+Regina+Yoo

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

=TITLE OF EXTRACT:= Increasing Cabbage Prices May Lead To New Kimchi Crisis

=SOURCE:= []

=DATE EXTRACT WAS WRITTEN:= January 23rd, 2012

=DATE CURRENT EVENT WAS WRITTEN:= March 6th, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= In Korea, the cabbage that is the most important part of "kimchi" has is price increased a lot, because "heavy cold spell killing a significant part of the crop." This happened a few months ago (before the extract was written), when the bad weather in September wilted the vegetables in the fields. This damage to the crops have dropped the supply of the cabbage, because there are not much healthy cabbage to sell out in the cabbage market. According to the economic theory, when the supply of a good or service decreases, the price of the good or service increases, while the quantity provided drops. Since the cabbage producers are not very able to produce a good quantity of the cabbages, not much cabbages will be supplied, at least during the same harvesting time period. As a result, the quantity demanded of cabbages 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. And therefore a kimchi crisis may ensue, due to the lack of supply of cabbage that lead to a huge price increase, which then lead to less purchases.

=VOCABULARY TERMS AND DEFINITIONS:= > =DIAGRAMS:=
 * Supply: the willingness and ability of producers to produce a quantity of a good or service at all prices in a given time period.
 * Demand: the quantity of a good or service that consumers are willing and able to purchase at all prices in a given time period.
 * Quantity Demanded: total amount of goods or services that are demanded at any given point in time.
 * Price: the amount of money expected, required, or given in payment for something
 * Market: where buyers and sellers come together to carry out an economic transaction and settle at an equilibrium price of a good or service.
 * Law of Demand: an economic law that states "As the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus," saying that consumers buy more of a good when its price decreases and less when its price increases.
 * Opportunity Cost: the second best choice when an economic decision is made
 * 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.

=EVALUATION:= The article states a few possible reactions to this issue. It says that "The ministry added that it will import 2,000 tons of cabbage from China between February and April to supply it to kimchi manufacturers and wholesaler." It is a good idea, because it can immediately solve the cabbage shortage problem, by increasing supply of cabbages using the addition of imported cabbages. However, this only helps short term, because the ministry would obviously have to pay extra cost to the Chinese cabbages, since they are not domestic products. There is certainly an opportunity cost to this type of solution. The extra money that is used to import in foreign cabbages can be made to improve soil conditions of the cabbage fields, and other materials that will better the cabbage supply. This way the solution is more long-term and perhaps will cost less. It is better to fix the problems of domestic products, than to avoid them and let it imported goods. It is also important to come up with a long-term solution, so that the problem will not only get fixed just this second, but also will solve further crop supply issues later on. Although not stated in the article, government subsidy would be a pretty good solution to the problem as well, although it may also have opportunity costs. The advantages of this is that it solves the inner problems, because it is providing more money to the cabbage producers so that they can increase their cabbage supply. This way the producers are free to do whatever they can with the subsidized money to improve the currently poor condition of cabbage supplies. However, the opportunity cost of such solution is that the government could've used the money on other things, because the government needs to pay more attention on other things, rather than just a mere vegetable shortage. It can use the subsidized money on subsidies on other more important products, like the necessities, such as food in general, gasoline, etc. It can also use its money on other, broader, important things that poverty, education, and so on.