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Ethanol as Fuel and Effects 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 Summary

This solutions discusses changes to supply and demand in the corn market in both scenarios in 246 words.

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If ethanol was used to fuel cars, it would lead to an increase in the demand for corn because ethanol is a corn derivative. The price of corn would rise, to correspond with the increased demand. This would change the entire demand pattern of corn due to the derivative. Because corn would be in such high demand for the derivative, manufacturers would be ...

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