Demand and Price Essay Example | Topics and Well Written Essays - 1500 words

Demand and Price - analyze ExampleThe other consumers of lemon yellow have to resort to other alternatives that ar relatively cheaper in the market. Biofuels are a product from corn and oil-rich seeds gum olibanum, the makers of biofuels have to substitute the comment of the two raw materials for the optimization of profits. Thus, the producer faces the choices to incur a high cost of issue, reduce the output or increase the consumption of oilseed for production. The civilise farmer benefits from higher returns and responds by increasing the production of corn (Dalton, 2009). The vertical axis shows the input of oilseed while the horizontal shows the corn input. The aim of the producing corporation is to maximize profit (Dalton, 2009). The point R we have the isocost line meeting with the isoquant. This combination of corn and oilseed will yield the company upper limit output minimizing on cost which is the objective of the company. An increase in the demand of biofuels w ill mean that the company has to move to a higher output level. This will need an increase in the inputs, which are corn and oil seed. How developments in agricultural and conversion technology might influence the impacts identified in above The developments in agriculture aimed at production of more corn will lead to increase the come out of corn in the market. The increase in supply is likely to eccentric a decrease in the price of corn. However, with the advancing technologies of conversion coming into operation a wider range of materials will be in operation(p) for production of bio fuels (Bhamra et al., 2010). This will further, ease the burden of bio fuels production on corn. The price of corn would establish a new equilibrium with the demand that now will be. DI indicates the demand of corn. Pe and Qe show the equilibrium price and quantity. The production of biofuel using corn as a raw material causes an increase in the demand of corn, thus the demand curve shift shown b y the arrows (Dalton, 2009). Consider the dissolvent below. The demand for more biofuels stimulates a higher demand for corn (Gupta & Ayhan, 2010). The demand curve shifts to D2 and a new equilibrium at the point J. The cause of increased competition between participants in the market on the impacts identified above. The competition will result to a higher demand of corn. The vagabond farmers will throw a fit production in order to execute the new market. This will mean changes in the farming practices and patterns. These changes necessitate farmers to use irrigation. The use of irrigation will cause a strain on water resources available. There will be a need to expand to potion of land used in corn cultivation yet limited space provides a challenge. The crop farmers will start cultivating of marginal lands, which are highly erodible (Gupta & Ayhan, 2010). The farmers will intensify the use of chemical inputs to increase crop yield. This will negatively affect the soil. This is because the increased use of fertilizers will lead to contamination of overflow and nutrient leaching. However, the level of damage will depend on management practices employed by farmers. development the level of cultivation may lead to high levels of erosion. This will further, affect the quality of water in the region. These damages will be presenting the problems of environment sustainability (Gupta & Ayhan, 2010). Cultivation of marginal lands and expansion of land under crop production is a threat to wildlife resources. The cultivation leads to destruction and clearing of vegetation,