3 ms·

I feel like mustard should be such a small portion of a person's budget that the price could double without affecting his ability to purchase it.

roenxi 4y ago
Then the price will more than double. If there was 100 tonnes of mustard consumed last year and there is 90 tonnes available this year, then the price rises until people stop buying about 10t of mustard.
- mminer237 4y ago
  Temporarily, yeah; but long-term, it's correct that this will incentivize more mustard growing.
  - atwood22 4y ago
    Why is there an incentive to grow more mustard? Subsidies have shifted the supply curve for mustard. The opportunity costs of growing mustard have increased due to subsidies for other crops. Now less mustard is grown and a new equilibrium price is set. The old amount of mustard will never be grown due to the shift in the supply curve from subsidies of other crops.
    - deleted 4y ago
      [deleted]
    - Dylan16807 4y ago
      The "more" was relative to 90 tonnes. You're correct that the new equilibrium would be below 100.
  - roenxi 4y ago
    In this context, if land is being redeployed to grow bio-energy crops then there will be less mustard consumed. There is not an infinite amount of farmland, farmers and capital available to grow things - if resources are being directed away from food to biofuels then there will be less food. The market will find an equilibrium, but it will involve people giving up mustard because the cost is too high. They have to - there is less mustard. Someone will have to give up consuming mustard and in the medium term it is going to be prices that are the mechanism. That is what prices going up generally mean - the market is shaking some people out so they stop using a product. In the short term I see they have a sign saying "only 1 mustard" or something like that.

3 ms·

I feel like mustard should be such a small portion of a person's budget that the price could double without affecting his ability to purchase it.

by mminer237 4y ago

roenxi 4y ago
Then the price will more than double. If there was 100 tonnes of mustard consumed last year and there is 90 tonnes available this year, then the price rises until people stop buying about 10t of mustard.
- mminer237 4y ago
  Temporarily, yeah; but long-term, it's correct that this will incentivize more mustard growing.
  - atwood22 4y ago
    Why is there an incentive to grow more mustard? Subsidies have shifted the supply curve for mustard. The opportunity costs of growing mustard have increased due to subsidies for other crops. Now less mustard is grown and a new equilibrium price is set. The old amount of mustard will never be grown due to the shift in the supply curve from subsidies of other crops.
    - deleted 4y ago
      [deleted]
    - Dylan16807 4y ago
      The "more" was relative to 90 tonnes. You're correct that the new equilibrium would be below 100.
  - roenxi 4y ago
    In this context, if land is being redeployed to grow bio-energy crops then there will be less mustard consumed. There is not an infinite amount of farmland, farmers and capital available to grow things - if resources are being directed away from food to biofuels then there will be less food. The market will find an equilibrium, but it will involve people giving up mustard because the cost is too high. They have to - there is less mustard. Someone will have to give up consuming mustard and in the medium term it is going to be prices that are the mechanism. That is what prices going up generally mean - the market is shaking some people out so they stop using a product. In the short term I see they have a sign saying "only 1 mustard" or something like that.