Everything Depends on Everything Else

Can an import tariff on fertilizer in the Ukraine affect the price of cotton in India and the price of chicken in the United States? Everything Depends on Everything Else Everything Depends on Everything Else

Increase or Decrease? A severe drop in fertilizer use, caused by an import tariff in Ukraine, the so-called “bread- basket” of the former USSR, will ___________ the quantity of wheat available to Ukraine. decrease

Increase or Decrease? If the government of Ukraine then buys wheat from U.S. grain dealers, the price of U.S. wheat will ___________. This will __________ the cost of flour to U.S. millers and __________ the cost of bread in U.S. grocery stores. increase

Increase or Decrease? It will also __________ the cost to India of purchasing wheat from the U.S., which will ___________ the demand in India for domestically produced wheat and ___________ its price. increase

Increase or Decrease? This will __________ the demand for land by Indian wheat growers and thus __________ the cost of growing cotton on land that is also suitable for wheat production. increase

Increase or Decrease? This will ___________ the quantity of cotton produced, __________ the price of cotton, and __________ the cost of purchasing cotton clothing. This will ___________ the demand for wool. increase decrease

Increase or Decrease? Meanwhile back in the U.S., the demand for land suitable for wheat production will __________, which will __________ the cost of growing feed grain for cattle. increase

Increase or Decrease? This will ___________ the quantity of cattle grown and cause beef prices to __________. This will increase the demand for chickens. increase decrease

Increase or Decrease? A fertilizer tariff reduces the Ukraine wheat crop. Ukraine buys wheat from the U.S. driving up the price of U.S. wheat. That increases the price of wheat India buys from the U.S. That drives up demand and price of Indian wheat. The higher price encourages Indian farmers to plant wheat instead of cotton. This reduces the amount of Indian cotton grown and pushes up the domestic price of cotton products thereby increasing the demand for wool products. Wheat production increases in the U.S., increasing the cost of producing grain for beef production. The higher-priced beef at U.S. stores increases the demand for chicken.