Weather conditions back to normal Economic Crisis Chapter Two Copyright (c)2014 John. Decrease in supply due to drought in the corngrowing states Changes in U.S government policy Bubble years Increase in production costs due to oil price increases and rains and flooding wiped out corn crop 2008-2009.Unexpectedly large U.S corn crops 2006-2008.Chapter 2 Copyright (c)2014 John Demand and Supply Analysis 1 Motivation – U.S corn markets Competitive Markets Defined The Market Demand Curve The Market Supply Curve Equilibrium Characterizing Demand and Supply – Elasticity Back of the Envelope Techniques Chapter Two Copyright (c)2014 John Chapter Two Overview Motivations Example: U.S Corn Market Historical price: $2.00 per bushel fell below $2.2005: Prices bushel rose above $5.2008: Prices bushel 20082009: Prices fell to $3.90 per bushel Why prices vary so much? Changes in Supply and Demand conditions affects pattern of prices Chapter Two Copyright (c)2014 John 20032004: Prices rose to $3.00 per bushel Motivations Example: U.S Corn Market 2002-2003 corn markets, competitive markets defined, the market demand curve, the market supply curve, equilibrium, characterizing demand and supply – elasticity, back of the envelope techniques. This chapter presents the following content: Motivation – U.S.
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