Economics Essay Example | Topics and Well Written Essays - 750 words - 2

Economics - Essay ExampleThis way edible lemon serves a two-way purpose and that pass on definitely increase its expect. Corn and soybean be considered as substitutes and concord to economic theory if take on for a product raises accordingly the demand for its substitute will simply decline. Following this principle the bell of the soybean will decline. Again clavus and soybean shares the same habitat for employment, especially the prime raw material for any agricultural production the land. Now an increased demand for clavus will also lead to a high price for the same, since price and demand are directly correlated. A product that is offering higher price will definitely translate into higher profit for the producer and an immediate shift from production of soybean to that of corn. Higher percentage of land and driveway will now be directed towards corn production than that of soybean (Pearce, 2006). The above discussion seems economically sound, how forever a careful investigation business leader reveal that this holds for short run. Once the producer starts to collapse more land and other raw materials to the production of corn, corn production will rise and production of soybean will fall. Hence in long run owing to higher supply of corn its price will come down and that of soybean will go up as it is exactly now. These points to the fact that in long run an eventual equilibrium will be reached where both will be produced at an optimum level for the economy. Last but not the least since, energy has an ever increasing demand, hence if corn can project itself as a viable kickoff of secondary energy in long run that have enough potential to replace fossil fuels then the trend for substituting soybean production land and raw material in favor of the corn might show a sustained trend, with soybean production looking for an alternative way as itself is a nutritious and valuable solid food source along with a rich source for food oil. It is obvi ous that since there is high need of alternative form of energy and that especially of bio fuel corn oil as an important source of bio fuel will enjoy this boom in demand and price for this product will go up. The magnitude of this rise in price is subject to oftentimes debate. First of all if demand for a product is matched by its supply then the rise in price is minimal or zero. However if this is not the scenario that is there is excess demand then the price will go up. Interestingly it is worth noting that in case of excess supply the price might also go down even courting a rise in demand for the come to product. The excess supply often follows a rise in demand owing to the behavioural frame of the producer who might over estimate the rise in demand and increase his supply of corn in tune of his expectations. Apart from this demand-supply interaction, many other factors do operate while determining the muckle of the corn oil. If people are well aware of the potential that c orn oil holds as a fuel and alternative source of energy that will definitely translate into higher demand. Again this has to be also undertaken into the realm of analysis that whether any other form of substitutes to corn oil does exist, that might be cheaper, easily available in plenty and better source of energy. As a viable source of alternative energy in the long run corn oil will face sort of a competition with Jatropha and Pongamia pinnata (Bridgewater, Halford and Karp, 2010, p. 236) and that outcome will