Reference no: EM131244361
Suppose the model of Supply and Demand is used to make predictions about changes in the equilibrium price and the equilibrium quantity of corn.
Interpret market scenarios: Within the corn market, predict the impact of changes in the determinants of demand or supply. In each scenario, identify the correct function (either corn supply or corn demand) and the appropriate direction of change (increase or decrease), for each situation below. Then use the analysis to predict the impacts of the change on the equilibrium corn price and equilibrium quantity of corn. Illustrate each answer with a simple graph. Remember, some complex analyses can produce the end-result of an “indeterminate change” in either the equilibrium price or quantity. Then, in a short paragraph, explain why the change in the market equilibriums occurred, and whether they “make sense” in comparison to outcomes in the real world market for corn. Treat each scenario as a separate event.
A. Suppose above-normal growing conditions (near-perfect weather, ideal soil moisture, no pest infestations, etc.) create a “bumper crop” of corn. Use supply-and-demand to predict the impact of the bumper crop on the equilibrium price and equilibrium quantity of corn.
When you perform this analysis, compare the market reaction as the corn-growing production conditions change from normal to above-normal growing conditions.
Are the predicted results of the model consistent with what typically happens in commodity markets when above-normal growing conditions impact agricultural production? Why is it important that the predicted results of a model be consistent with reality?
B. Suppose corn is a viewed as a “normal good” from the consumer household income perspective. If a worldwide recession reduces household consumer incomes on global scale, use supply-and-demand to predict the impact of decreased consumer income on the equilibrium price and equilibrium quantity of corn.
C. Suppose the corn market is impacted by multiple forces, and a complex supply and demand analysis is required.In this scenario, suppose that an increased number of corn consumers enter the corn market because they are purchasing corn to meet a growing demand for corn-based ethanol.
Simultaneously, the US Department of Agriculture increases subsidies for corn production, in an effort to support/stabilize farm income.
Apply the supply-and-demand model to predict the impact of these two changes on the equilibrium price and equilibrium quantity of corn.
D. Suppose corn producers can readily change-over their operations to produce soybeans instead. Assume it is simple for a producer to grow corn or soybeans on a piece of land – the producer simply decides to change the crop in the next growing season.
Assume there is a notable increase in both the price and profitability of soybean production.
What will be the predicted impact on the corn market, because of the producer’s reaction to better profits growing soybeans?
Does the supply or the demand for corn change in this scenario? Why? What is the impact of this change on the equilibrium price and equilibrium quantity of corn? Is this predicted result consistent with real-world market outcomes? Explain.
|
Covariance of a pair of random variables be negative
: Why can the covariance of a pair of random variables be negative when the variance of random variables is always non-negative?
|
|
Solow growth model with constant population growth
: Consider the Solow growth model with constant (positive) population growth (γN > 0) and technological change (γH > 0). Suppose that the aggregate production function is Yt = ztKt^a(HtNt)^1−α. Derive the law of motion for capital per effective worker,..
|
|
In the context of the solow model
: The countries of Aurora and Solaria have the same fundamentals, but Aurora is twice as rich as Solaria. In the context of the Solow model: (a) Which country will have the higher growth rate in the short run? (b) In the long run? Note: Use diagrams to..
|
|
What happens to quantity of labor demanded and to production
: Monster Conglomerate Inc . (MCI ) manufactures paper clips for the Pentagon. At its current capital stock it produces paper clips with t he production function: y = 8.5L - 0.5 L2 where L is the number of workers employed. What happens to the quantity..
|
|
Changes in equilibrium price-equilibrium quantity of corn
: Suppose the model of Supply and Demand is used to make predictions about changes in the equilibrium price and the equilibrium quantity of corn. Suppose above-normal growing conditions (near-perfect weather, ideal soil moisture, no pest infestations,..
|
|
Ideas have consequences
: Develop the statement "ideas have consequences" by applying the Cultural Epoch Theory to a culture. You could use America as an example. Your thread must demonstrate that you understand this theory as expounded from your textbook.
|
|
Suppose there are three ticket prices at concert
: Suppose there are three ticket prices at a concert: $55, $65, and $90. You decide to try your luck at the last minute and prefer the cheapest ticket possible. There is a 50% chance that the $55 ticket is available, a 30% chance that $65 is the cheape..
|
|
Reduce future production costs to improve company earnings
: A recently hired chief executive officer wants to reduce future production costs to improve the company’s earnings, thereby increasing the value of the company’s stock. The plan is to invest $70,000 now and $70,000 in each of the next 3 years to impr..
|
|
Impacts of new vaccine using the model by thomas malthus
: In class I showed the impacts of a new vaccine using the model by Thomas Malthus. Likewise, now consider the 2014 Ebola outbreak in West Africa. In 2014 the Ebola virus outbreak in West Africa led to 11325 deaths. Explain how the Ebola deaths in Sier..
|