“Corn prices are up more than 60%
over the last seven weeks as the worst drought in more than half...

Question

“Corn prices are up more than 60% 
over the last seven weeks as the worst drought in more than half a century 
blankets the corn belt in the Midwest.” (News, Cnnmoney.com,August 9, 2012)

Use the demand and supply analysis 
to explain how higher price of corn impact the market for Ethanol (a motor fuel 
manufactured from corn and can be used to power the engines of many 
Automobiles).
 (decide which 
side of the market is affected, demand or supply, and what is the effect on 
equilibrium price and quantity )

Robert · Accepted Answer

Use the demand and supply analysis to explain how higher price of corn impact the 
market for Ethanol (a motor fuel manufactured from corn and can be used to power 
the engines of many Automobiles). 
Answer: 
Corn is used as an input in the production of Ethanol. So when price of corn rises,

“ Corn prices are up more than 60% over the last seven weeks as the worst drought in more than half a century blankets the corn belt in the Midwest.” (News, Cnnmoney.com,August 9, 2012) Use the demand...

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