Asian Rice Crisis

The credit crunch is rivalled, arguably, by increasing food prices as a cause of economic (and human) concern in 2008.

This article from the BBC looks at some of the implications and you can watch/show videos on the rice crisis here.

I have put together some questions on this article for use with my AS classes tomorrow (AQA Unit 1, Markets and Market Failure):

(a) Why might a food shortage be regarded as a case of market failure?

(b) Give two reasons why the price elasticity of supply for food is low in the short-run?

(c) Using a diagram, show the impact of rising demand for food on market price and output of food (remember to show supply as price inelastic).

(d) What factors could explain rising demand for food and food crops across the global economy?

(e) Using a diagram, show the impact of a maximum price on food markets (set the maximum below equilibrium price). Is this an effective policy?

(f) What other policies could be adopted to tackle this crisis? Give one disadvantage (government failure) associated with each.

Ideas for possible policies can be found here.

In addition, The Economist has kindly focused on this issue this week - online link is here.