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Article Analysis

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Article Analysis
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ECO/365
August 13, 2012
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Article Analysis
Trends Consumption in Corn The economics of trends in consumer consumptions of goods is closely by a wide variety of groups and agencies to determine what if any, patterns of expenditures can be discerned. The understanding the relationships between consumer trends and the supply and demand o such goods is intricately linked and help to reveal by the consumer trends. The consumption of goods is a staple of any economy making the understanding of supply and demand a critical concern. To illustrate how supply and demand has a lasting effect on consumers and goods, this paper will address corn as a commodity, utility and a consumer trend.
Utility in Corn The definition of a utility is a good or service on which many consumers depend (Utility, 2012, p. 1). For much of the world, corn is considered an indispensable utility. Not only is corn used to feed millions of people and their livestock, corn is used in the manufacture of certain medications as well as in many international cuisines, as both a cooking medium, corn oil, and as a thickening agent in the form of corn starch. Corn is also the basic ingredient in the distillation of several alcoholic beverages as well as the primary source in the making of ethanol, an alternative fuel source. The diversity of corn literally affects billions of people, making it an essential utility to consumers all over the world (Cellania, 2012).
Demand of Corn A recent study found, due to an increase in ethanol fuel production, that there was a rise in the demand for corn in the first half of the 2010-2011 market years. With a greater consumer demand for ethanol fuel, there was an equivalent demand for an increase in the supply of corn. In 2011, the production of ethanol accounted for need of 4.95 billion bushels of corn, up 382 million bushels from the year before (Good & Irwin, 2012, p. 1). The increase in demand for corn in just the ethanol production market, illustrates how, if the supply remains unchanged, there would be an increase in price for the demand for corn. This increase would have far-reaching effects from the cost to feed millions of people to the manufacture and sale of countless other consumer goods (Good & Irwin, 2012).
Supply of Corn If, in any given year, there were a poor yield in the farming of corn, there would exist the same or higher demand but a decrease in the supply. In 2010, adverse weather conditions, in the form of lower than normal temperatures and higher than normal rainfall lead to a notable reduction in the predicted corn crop yield. This created a worldwide demand, which lead to an increase in the price of corn, and all the goods manufactured with corn and its byproducts (Good & Irwin, 2011).
Elasticity Price of Corn Corn yields vary from year to year. With other consumer goods, this would lead to wild fluctuations in prices. Yet, with corn, prices remain stable even across years of varying yields. This makes the price of corn inelastic. The actual quantity produced during any growing season has little to do with the percentage of the price changes in the marketplace (Colander, 2010).
Conclusion
'The world demand for corn, and its many byproducts, makes it a consumer utility. The stability of the price of corn across varying yields makes it an inelastic product. The demand for corn to feed and fuel a growing world population is increasing. Luckily, even in years of poor crop yields, the supply is adequate. Due to its diverse nature, consumers have little choice in their need for corn and corn products. This creates a demand no matter the price.
References
Cellania, M. (2012). 10 ways we use corn. Retrieved from http://www.mentalfloss.com/blogs/archives/70165
Colander, D. C. (2010). Economics (8th ed.). New York, NY: McGraw-Hill.
Good, D. & Irwin, S. (2012). Alternative 2011 corn production, consumption, and price scenarios. Retrieved from http://www.farmdoc.illinois.edu/marketing/mobr/mobr_11-01/mobr_11-01.html
Utility. (2012). Economic utility. Retrieved from http://www.businessdictionary.com/definition/economic-utility.html

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