Discuss Relationship between policy and effect on unrelated market
Question 1: Some states are planning that ethanol be mixed with gasoline to comply with anti pollution laws. Ethanol can be made from corn. Determine what effect are these policies having on the equilibrium price and quantity of corn?
Question 2: Corn is a key input in the poultry, dairy, hog, and cattle industry. What effect has the sharp increase in the price of corn had on these industries?
Please use supply/demand graphs to analyze shifts in supply and demand and the resulting changes in market equilibrium in the situations described in Questions 1 and 2. Show the shifts of either demand or supply curves.
Illustrate graphically how the event described in Question 1 affects the equilibrium price and quantity of corn.
Illustrate graphically how the event described in Question 2 affects the industries.
