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    Affect of ethanol on the corn market

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    Explain how the market for corn would be affected if ethanol, a corn derivative, was used to fuel cars in the United States. How would the market be affected if a new technology caused corn farming to be more efficient?

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    Solution Preview

    When demand exceeds supply, price increases.

    Currently in the U.S., the supply of corn onto the market, exceeds it's demand. (The economist magazine, November 2008). The price of corn is thus very low.

    Other uses of corn has come up, which includes producing ethanol out of corn to fuel cars. This has become necessary as alternative sources of fuel are being sort, due to the high prices of fuel. (gas prices has risen ...

    Solution Summary

    The solution determines how the market for corn would be affected by ethanol.