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In the world of finance there are many confusing terms and concepts, but thankfully commodities are not among them. When hearing the words "commodity prices", all an economist is really talking about is the cost of goods. Granted, most economists are talking about major commodities when referring to commodity prices, but technically a commodity can be anything consumers purchase.
The main reason that commodities are so important when regarding the economy is that they form the backbone of practically any nation's wealth. One particular commodity that very much controls the wealth in the Middle East is oil. It is for this reason that we so often hear about the rise and fall of oil prices. Another reason why we often hear about commodities is that they are far more volatile compared to a nation's standard economic setup.
Volatility is a measurement of how dramatically the commodity price of a particular good changes. This is an important value because it can be an indirect way of judging how stable an economy is. Naturally, commodity diversity will result in a more stable economy. Returning to the oil example, it is easy to see why the Middle East is regarded as a slightly unstable area. Their heavy reliance on oil means that the fall and rise of oil directly affects their economic standing.
Another important value to understand when speaking about commodity prices is the rate of measurement per item. Many would understandably think that an item would be measured perhaps by its mass or its volume, but unfortunately this is not so. It isn't uncommon to hear of oil being referred to in barrels, or precious metals in carats. The simple fact of the matter is that there is no uniform method of measurement, and the measuring procedure varies quite a bit from commodity to commodity.
In a nutshell, commodity prices are important to understand because they both affect the price of individual goods and they also indicate how a particular commodity affects a nation's economy. Commodity prices have high volatility, and greater diversity ultimately makes for greater stability in an economy.
What else can I help you with?
Where can you find current commodity prices?
The NASDAQ reports current commodity prices daily. Current commodity prices can also be found in the financial section of local newspapers.
Where can one get the latest Nybot commodity prices?
A person can get the latest Nybot commodity prices from a few different places. Some of these places include Trading Charts, INO, and The New York Commodity Exchange.
Where can one find commodity futures prices?
One can find commodity futures prices from the following sources: Saxo Markets, Bloomberg, Barchart, PSG Online, Commodity Charts, Investopedia, to name a few.
Can governments fix commodity prices?
yes!
Why would high commodity prices and low interest rates help to maintain share prices?
There are many reasons high commodity prices and low interest rates help to maintain share prices. This keeps the market competitive.
What happens if the prices of commodities fall?
When the prices of the commodities fall, the demand of that commodity usually increases. On the same note the supply of the given commodity usually decreases as well.
When the price of both substitute and compliment of a commodity risewhat will be the demand for that commodity?
There wouldn't be a great demand for the commodity as, lower ther the prices, more the demand of the commodity.Remember, Demand for a product increases when the prices of its complements decreaseANSWER: Supply and demand
What does PRICES mean?
Changes in prices time by time due to inflation or demand of commodity.
What does Prices vary mean?
Changes in prices time by time due to inflation or demand of commodity.
How a price of a commodity is determined?
The price of a commodity is determined primarily by the forces of supply and demand in the market. When demand for a commodity increases or when supply decreases, prices tend to rise. Conversely, if supply increases or demand decreases, prices usually fall. Other factors such as production costs, market competition, and external influences like government policies and global events can also impact commodity prices.
When the supply of a commodity exceeds the demand prices generally rise?
When the supply of a commodity exceeds demand, prices typically fall, not rise. This occurs because sellers may lower prices to attract buyers and reduce excess inventory. Conversely, when demand exceeds supply, prices rise as consumers compete for the limited availability of the commodity. Thus, the relationship between supply and demand is fundamental in determining market prices.
Factors affecting demand for a commodity?
price of a commodity, the higher the prices, the lower the demand if there is not a equiblirum condition between demand and supply then it affect commodity demand , inflation and income, and monopoly in some commodity in some area is also affect demand of commodity
