Demand of Corn Oil

Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 3 (623 words) Published: March 28, 2011
Demand for Coin Oil

Demand for Corn Oil
Content

Introduction…………………………………………………………………………...page 2

Supply of Soybeans …………………….………………….………………………… page 2

Price of Corn Oil . . …………………….………………….………………………… page 3

Price Elasticity of Demand and Total Revenue . ………….………………………… page 3 Conclusion………………………………………………………………………....... page 3-4

References………………………………………………………………………....... page 4
Demand for Corn Oil

Introduction
Rising oil prices in the United States have forced discussion on seeking alternative energy sources. One option that keeps being discussed by researchers is the usage of corn oil as a viable solution. This paper will explore the economic factors such as supply, demand and price elasticity around corn oil and its substitute soybeans.

Supply of Soybeans
If the demand for corn increases due to is use as an alternative energy source, the supply of corn's substitutes such as soybeans will decrease. Based upon the determinants of supply - producers, resources, market expectations, subsidies and taxes and technology - the factors point to a decrease in supply. The number of producers of soybeans may decrease. Some farmers may choose to use some of their land to grow corn as opposed to soybeans, to meet the increase in corn demand. A decrease in producers would also cause a decrease in resources used to grow soybeans. Also, the market would expect corn as that is what is being touted as the viable energy source, so there's more pressure on farmers to have corn. The US government currently gives subsidies to corn farmers, which gives them an even bigger incentive to grow corn instead of soybeans. While the technology is there to grow soybeans, there is only so much farm space and corn is the primary focal point.

Price of Corn Oil
If the demand for corn increases, the price of corn oil will also decrease. Whenever demand for something increases, and the supply for that item decreases, it drives the...
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