Determinants of Supply and Demand
If the demand for corn increases due to its use as an alternative energy source, soybean would become useless, more so the price for corn would increase because it may be limited since it would be its only demand. Like the old saying demand goes up, so does price. As price goes up, demand goes down, forcing equilibrium. If there is a decrease in soybean supply due to less farmland for soybean production, everything is based on a give and take, so someone has to give and then take. On the other hand, another by-product of the price increase is that some production will shift from other items like soybean to corn, decreasing relative demand and so price. When we think about supply and demand, we have to take into factor what can cause the shifts in the entire demand curve to change. Any factor that increases the cost of production decreases supply, Any factor that decreases the cost of production increases supply. The price of corn oils goes up dramatically, since this is their only source of energy. The suppliers have to make profits of this somehow. When the demand is high, the price will increase because of the demand. Change in consumer tastes, change in the number of buyers, change in consumer incomes change in the prices of complementary and substitute goods, change in consumer expectations. The determinants cause shifts in the entire supply curve: change in input prices, change in technology, change in taxes and subsidies, change in the prices of other goods, change in producer expectations, change in the number of suppliers, When you have a increase in demand for corn is the result of increase in number of buyers in corn market due to its use as an alternative energy source, since there are more buyers in the market which means more income too, therefore farmers will use more or all their farm land to produce corn. When it comes to the total revenue it is all about who pay what and when. The more the produced...
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