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

Elasticity - Essay Example wedded an increasing price for corn, farmers will tack to producing corn rather than corn substitutes like soybeans. In addressing the equal of an increase in the take aim for corn resulting from using corn as an alternative energy source, it is expedient to understand the determinants of demand. According to Mankiw (2007), the determinants of demand or the variables affecting the quantity of the good demanded are price, income, prices of related goods, tastes, expectations, and turning of buyers. While movement in prices represents a movement along 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 alternative en ergy 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 value of Corn Quantity of Corn Source Mankiw, 2007, p.