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Examiners rewardanswers that providechains ofreasoning
These are good connective phrasesby contrast…A consequence ofthis might be …therefore…this mightmean…on the otherhand…this is because
Diagrams matter!Diagram must havesFully labeledOriginal and new equilibriumDemand and supply the correct way roundWell explained – you must explain why thecurve has shifted, in detailThink about the elasticity – e.g. oil hasinelastic demand and supply
Why are prices volatile in the marketsfor many commodities?LowPedLowPesVolatileSupplySpeculators
Using analysis diagramsPriceQuantityPriceQuantity
Using analysis diagramsPriceQuantityPriceQuantityS1D1
Using analysis diagramsPriceQuantityPriceQuantityS1D1 D2P1P2
Using analysis diagramsPriceQuantityPriceQuantityS1D1 D2P1P2S1D1
Using analysis diagramsPriceQuantityPriceQuantityS1D1 D2P1P2S1D1S2P1P2
Problems arising from price volatilityRisk and Uncertainty• Uncertain incomes and profits• May limit investment by poorer farmersRisk of poverty and unemployment• Millions of smaller farmers suffer• Many do not gain when world prices riseMacroeconomic effects• Volatile export revenues affects the trade balance• High prices can cause inflation and food poverty