Eco Assign 1 - Valarie Chambers Principles of Economics...

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Valarie Chambers Principles of Economics Instructor: Sarah Jenyk Question: [ 1] If the demand for corn increases due to its use as an alternative energy source, what will happen to the supply of corn's substitute such as soybean? Assume that, besides being substitutes for one another, corn and soybeans require the same raw material, such as the same farm land. Think about whether farmers will use their soybean farms to produce more or less corn. Explain, in economic terms [e.g. supply determinants], why this is so. [2] What will happen to the price of corn oil? [3] How does the price elasticity of demand for corn oil influence the quantity-demanded of corn oil and the Total Revenue earned by sellers of corn oil? Explain, using economic terms, why this is so? First I think it’s appropriate to explain exactly what supply and demand are. The theory of supply and demand is one of the fundamental theories of economics and is the foundation upon which many other more elaborate economic models and theories are based. By definition, supply is the amount of product that a producer is willing and able to sell at a specified price,
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This note was uploaded on 03/27/2011 for the course ECON 312 taught by Professor Jenyk during the Spring '11 term at DeVry Decatur.

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Eco Assign 1 - Valarie Chambers Principles of Economics...

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