Professor Olusegum Okunnu ECON 312

Professor Olusegum Okunnu ECON 312 - Professor Olusegum...

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Professor Olusegum Okunnu Principles of Economics, Econ 312 Week 2 Assignment Price Elasticity of Demand 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. What will happen to the price of corn? How does the price elasticity for corn oil influence the quantity demanded of corn oil and the total revenue earned by sellers of corn oil? We are given the following premise: (1) The demand for corn is increasing (2) Corn and soybeans are substitute goods (3) Corn and soybeans compete for the same inputs of production Based on the rules of demand and supply, we know that (1) causes the price of corn to increase. (Demand goes up, price goes up.)
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This note was uploaded on 06/04/2011 for the course ECON ECON312 taught by Professor Dellapena during the Spring '09 term at DeVry NY.

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Professor Olusegum Okunnu ECON 312 - Professor Olusegum...

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