Reference no: EM133243197

Assignment:

We talked in class last time about the effect of the Russian invasion of Ukraine on world oil and gas prices.

The war will likely also have a big effect on world grain prices. Russia and Ukraine are both large producers and were, before the war, large exporters, of wheat. Fighting in wheat-growing areas, as well as diversion of farm workers to the military, is reducing the amount of wheat grown and harvested. Perhaps more importantly, much of the wheat that has been harvested and stored cannot be exported from Black Sea ports due to fighting in and around port cities and shippers' reluctance to run the risks of loading cargo in a war zone.

China, India are, though, respectively, the world's largest wheat producers accounting for nearly 30% of world production between them.

Based on the type of international supply-and-demand analysis, we have seen in class and in the diagrams for the questions above, what do you think will happen to the price of wheat in China and India?

Group of answer choices: Choose 1

Wheat prices in India and China will remain unchanged. Each country can simply serve its own domestic market.

Prices could increase if Chinese or Indian farmers found it more attractive to export their wheat to other countries as a result of the reduction in supply from Ukraine and Russia. Prices could also increase if one or both countries cannot serve all their domestic demand and must pay more for imports.

Prices in India and China will remain unchanged; people in those countries could simply substitute rice for wheat.

Prices will decline to pre-war levels because countries like China and India will increase their wheat production.