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Explain the impact of higher corn prices on consumers. Draw a graph explaining the impact of higher corn prices on consumers. Explain which curve will shift on your graph and the change in price and quantity demanded. Explain the impact of higher corn prices on producers. Draw a graph explaining the impact of higher corn prices on producers. Explain which curve will shift on your graph and the change in price and quantity supplied.

Explain the impact of higher corn prices on consumers. Draw a graph explaining the impact of higher corn prices on consumers. Explain which curve will shift on your graph and the change in price and quantity demanded. Explain the impact of higher corn prices on producers. Draw a graph explaining the impact of higher corn prices on producers. Explain which curve will shift on your graph and the change in price and quantity supplied.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Explain the impact of higher corn prices on consumers.

Draw a graph explaining the impact of higher corn prices on consumers. Explain which curve will shift on your graph and the change in price and quantity demanded.

Explain the impact of higher corn prices on producers.

Draw a graph explaining the impact of higher corn prices on producers. Explain which curve will shift on your graph and the change in price and quantity supplied.

Consumer effect But there is considerable debate about how much consumers will see these higher prices show up in their grocery carts. Some analysts, such as Ken Mayland, president of Clear View Economics in Pepper Pike, Ohio, say food prices are likely to increase enough to spark inflationary concerns. "It will likely mean higher prices for com-based products, which is practically everything," says Richard Asplund, research director at Melvin Securities in Chicago. In Mexico, higher corn prices are being blamed for skyrocketing tortilla prices, which have increased the country's inflation rate. Last week, the Mexican government struck a deal with producers and grocery stores to cap tortilla prices. But American Farm Bureau Federation senior economist Terry Francl says U.S. consumers will see very little impact from higher corn prices. He expects the index for food inflation at the consumer level will not be affected by ethanol production in 2007 and then will rise 0.2% in 2008 and 0.5% in 2009 because of ethanol production. "It's probably not going to be all that much," he says, noting more than half of corn is used to feed animals. But it takes time before higher feeding costs affect retail meat prices. And meat prices are likely to rise at a much slower pace than the increase in feed
Transcribed Image Text:Consumer effect But there is considerable debate about how much consumers will see these higher prices show up in their grocery carts. Some analysts, such as Ken Mayland, president of Clear View Economics in Pepper Pike, Ohio, say food prices are likely to increase enough to spark inflationary concerns. "It will likely mean higher prices for com-based products, which is practically everything," says Richard Asplund, research director at Melvin Securities in Chicago. In Mexico, higher corn prices are being blamed for skyrocketing tortilla prices, which have increased the country's inflation rate. Last week, the Mexican government struck a deal with producers and grocery stores to cap tortilla prices. But American Farm Bureau Federation senior economist Terry Francl says U.S. consumers will see very little impact from higher corn prices. He expects the index for food inflation at the consumer level will not be affected by ethanol production in 2007 and then will rise 0.2% in 2008 and 0.5% in 2009 because of ethanol production. "It's probably not going to be all that much," he says, noting more than half of corn is used to feed animals. But it takes time before higher feeding costs affect retail meat prices. And meat prices are likely to rise at a much slower pace than the increase in feed
"It will likely mean higher prices for com-based products, which is practically everything," says Richard Asplund, research director at Melvin Securities in Chicago. In Mexico, higher com prices are being blamed for skyrocketing tortilla prices, which have increased the country's inflation rate. Last week, the Mexican government struck a deal with producers and grocery stores to cap tortilla prices. But American Farm Bureau Federation senior economist Terry Francl says U.S. consumers will see very little impact from higher com prices. He expects the index for food inflation at the consumer level will not be affected by ethanol production in 2007 and then will rise 0.2% in 2008 and 0.5% in 2009 because of ethanol production. "It's probably not going to be all that much," he says, noting more than half of corn is used to feed animals. But it takes time before higher feeding costs affect retail meat prices. And meat prices are likely to rise at a much slower pace than the increase in feed costs, he says. Says Michael Swanson, agricultural economist at Wells Fargo in Minneapolis, "We won't see any impact unless corn prices stay high through all of 2007." If that happens, "Eventually, it is really going to show up on the meat counter." Strong demand for corn has led to a sharp increase in prices. Price for corn trading for delivery in March 2007: (dollars per bushel) $4.00-$2.55 $3.00- $2.00- $1.00- 5/27/05 1/6/06 $4.04 1/22/07
Transcribed Image Text:"It will likely mean higher prices for com-based products, which is practically everything," says Richard Asplund, research director at Melvin Securities in Chicago. In Mexico, higher com prices are being blamed for skyrocketing tortilla prices, which have increased the country's inflation rate. Last week, the Mexican government struck a deal with producers and grocery stores to cap tortilla prices. But American Farm Bureau Federation senior economist Terry Francl says U.S. consumers will see very little impact from higher com prices. He expects the index for food inflation at the consumer level will not be affected by ethanol production in 2007 and then will rise 0.2% in 2008 and 0.5% in 2009 because of ethanol production. "It's probably not going to be all that much," he says, noting more than half of corn is used to feed animals. But it takes time before higher feeding costs affect retail meat prices. And meat prices are likely to rise at a much slower pace than the increase in feed costs, he says. Says Michael Swanson, agricultural economist at Wells Fargo in Minneapolis, "We won't see any impact unless corn prices stay high through all of 2007." If that happens, "Eventually, it is really going to show up on the meat counter." Strong demand for corn has led to a sharp increase in prices. Price for corn trading for delivery in March 2007: (dollars per bushel) $4.00-$2.55 $3.00- $2.00- $1.00- 5/27/05 1/6/06 $4.04 1/22/07
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