Elasticity Essay Example | Topics and Well Written Essays - 500 words

Elasticity - Essay ExampleGiven an increasing price for corn, farmers will shift to producing corn quite a than corn substitutes like soybeans. In addressing the impact of an increase in the demand for corn resulting from using corn as an alternative vigor source, it is useful to pull in the determinants of demand. According to Mankiw (2007), the determinants of demand or the variables affecting the quantity of the redeeming(prenominal) demanded are price, income, prices of related goods, tastes, expectations, and number of buyers. While movement in prices represents a movement on the demand curve, the demand curve shifts leftward or rightward based on changes in income, prices of related goods, tastes, expectations, and number of buyers. The determinants of demand or the variables affecting the quantity demanded of a good are identified in Table 1. Table 1. Determinants of Demand Source Mankiw, 2007, p. 69 When the demand for corn increases when corn is utilized as an alternati ve energy source, we can represent the situation as a rightward shift in the demand curve. This is shown in Figure 2 where the right ward shift in demand is represented in the movement from D2 to D3. Figure 2. Shifts in Demand Curve Price of Corn Quantity of Corn Source Mankiw, 2007, p.