Demand of Corn Oil

Rising inunct bells in the United States have forced discussion on seeking substitute(a) energy sources. One option that keeps being discussed by researchers is the usage of corn whiskey whiskey whiskey oil as a practicable solution. This paper will search the economic factors such as release, demand and price elasticity about corn oil and its substitute soybeans. Supply of Soybeans If the demand for corn increases payable to is use as an alternative energy source, the supply of corns 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 opt to use some of their land to find 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 turn soybeans. Also, the market would expect corn as that is what is being touted as the viable energy source, so in that locations 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 unproblematic 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 full point decreases, it drives the price of it up in the marketplace.It becomes that much more valuable as its that much harder to attain. If everyone wants corn, but theres only so much corn available, the corn farmers can charge more for it because they know consumers will be instinctive to pay more to have it. Price Elasticity of Demand and complete Revenue According to Wally Sparks article, corn is an springless good because there argon so few substitutes for it (Sparks, 2007). When a good is inelastic, that means that customers atomic number 18 non as sensitive to price changes, versus those of an elastic good.So even when corn prices were at an all time high years ago, people were alleviate consuming corn because in the short run, they had few other options. When a good is inelastic, and the price of that good goes up, sum of money revenues also go up. Lets verbalize corn was $8/barrel and a farmer normally sells cytosine barrels. That will yield $800 for that farmer. Well if he raises the prices to $10/barrel and pacify sells at least 100 barrels since th good is inelastic and demand hasnt changed that same farmer has now made $1,000.While this is expert a made-up example, it shows how the increase in price yields more total revenue when a good is inelastic. Conclusion Supply and demand are king in understanding and predicting market trends. When something is in high demand, sometimes producers arent a ble to make enough of it quickly enough. This causes prices to go up because supply is down. This principle applies to everything from the cars we drive to the food we eat, and in this case the corn oil we use.