Supply and Demand

When the Soviet Union, which had been a command economy, broke apart, an official of the new Russian government called an official of the American government and asked” “Who is in charge of bread distribution?”

It took a few minutes for the American official to fully understand the question.  But when he did, he answered: “No one.”

The Russian could not understand that.  How can wheat be grown, ground into flour, baked into bread and distributed to stores without the government telling everyone what to do?

Use your knowledge of supply and demand (chapter 4) and key concepts learned in the chapters assigned this week (chapters 1-4) to explain to the Russian official how this process works.  You must refer to at least two key concepts from week 1.  Use CAPITAL LETTERS to name and define each concept.  Please refer to the list of key concepts found at the end of every chapter.

You don’t have to do it all in one post.  Instead, you may wish to discuss one market at a time or, perhaps, explain just why is that our system does not have a distribution plan.

This is a true story.  The Russian government really did call the United States government and asked how to distribute bread in a free market system.  How that is done is so normal for us, that we probably don’t even think about it.  But now is a good time to think about it and obtain a better understanding of a free market.

Assignment Summary:

1) Review the Supply and Demand Guide (attached) and the Supply and Demand PowerPoints  (attached) before you start your posts.

2) Watch the following videos:

The Invisible Hand – 60 Second Adventures in Economics (1/6)

Milton Friedman – Lesson of the Pencil


3) Review Chapter 4 in the textbook:


Principles of Economics, 8th edition by N. Gregory Mankiw, Cengage Southwestern; ISBN: 9781305585126


4) Then consider the multiple steps (markets) involved in producing and distributing the loaves of bread that you find in your local supermarket.  Explain to the Russian official how the free market accomplishes this rather impressive task.

Remember to refer to the appropriate graph(s) in the Supply and Demand Guide as you examine the various markets involved.  If you wish to draw an appropriate graph and attach it to your post you may, but that is not required.  (If you do, be sure to explain the graph in your post, but don’t attach your post, just the graph).

5) Post on three different days for a minimum of three posts.  Failure to meet these minimum posting requirements results in point loss.  Remember to respond to your instructor’s questions.  That is an important part of your grade.

    • Remember to document all use of sources by using citations and references.  These should be in APA format.(attached). Your posts should be a minimum of 550 words, not including the sources.



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