Wednesday, February 16, 2011

Costly gas fuels wholesale prices

In this article, the increase in the cost of goods before they reached consumers saw a dramatic increase from the previous month. The cost of wholesale products in turn made the cost of consumer goods increase at an immense rate. This increase could possibly limit the amount of one particular good a person can buy at a time or limit the spending of households all across the nation. With the rise in wholesale products comes a raise in consumer cost. Often times though, in a weak economy, those high-profit producers have to lower their prices at the consumer rate to even get any kind of business. This is because in a weaker economy there are more leakages than money being put into the economy, causing it to suffer and in turn becomes weak. Many people across the nation face threats of rising prices of commodities that they need in order to live comfortably. This is an attempt to strengthen the economy, as there will be a lot more money coming into the economy than leaving it. The constant rise of the prices of corn products could affect the prices of other food products that utilize corn in their recipe. With this rise, you may see an alternative to corn byproducts. Maybe something that looks and taste like corn byproducts but is offered at a lower price. Alternatives may be the way that consumers get around these sudden increases and still live life comfortably. While there is no alternative for the surging energy costs in things such as home heating and a/c, consumers may see a subsiding of gas prices in the future.

4 comments:

Smith said...

What do you think is the underlying reasoning behind the price levels increasing?

Alissa said...

I believe that the underlying reasoning behind the price increases is because of the government's attempts to get us out of the recession. In order to get us out of recession, prices had to be risen so that we could have more money coming into our economy here at its weakened state. Also, these prices have increased because the products have become a lot more scarce. Scarcity of a product with high demand requires higher prices so the producers would be able to afford to make more of the scarce product.

Cara Sheffer said...

To answer what Smith said, I think that one of the main reasons for all of this is inflation. In class we have talked about gradual inflation, but I think this has something to do with sudden inflation. In reaction to rising gas prices, not only nation wide, but world wide; I think that other goods have to raise their prices to stay stable with the rest of the action going on. And Alissa said in the post something about a weak economy, and we have talked about the strength of the economy being the strength of the dollar. This would effect prices of nearly everything, especially considering that the economy is down at the moment.

taylor said...

Cara is exactly right. As long as the economy is down, most prices of necessities, such as gas, will be raised to an extreme amount. This extreme price change will keep the economy flowing because money will constantly be circulating whether we truly have it in our pockets or not.