The United States currently is experiencing one of the worst droughts in recent
ID: 1240581 • Letter: T
Question
The United States currently is experiencing one of the worst droughts in recent American history. Using demand and supply analysis, answer the following questions. Use a diagram to illustrate your answer for parts a. through d. of this question. What is the likely effect of the drought on the market for corn? Many of you consumed soft drinks sweetened by high fructose corn syrup (HFCS). HFCS. as the name suggests, is made from corn. What is the likely effect of the drought on the market for soft drinks? Sugar is a substitute for HFCS in the production of some foods and beverages. What is the likely effect of the drought on the market for sugar? Corn is used in the feeding (or "fattening") of cattle before they are sold to a slaughterhouse or processing plant to become a meat product. Veal is the meat of young cattle (or "calves). What is the likely effect of the drought upon the market for veal and why? What is the likely effect of the drought on the revenue of corn producers?Explanation / Answer
a. Due to drought enough corn will not be available in the market and hence the supply will fall short of demand resulting in the increase in the prices of corn in the market. b. Due to the increase in the prices of corn the supply of soft drinks will be affected too because enough of HFCS will not be available. c. Sugar is a substitute hence with the decrease in the supply of HFCS people will look for substitute and therefore will start using Sugar resulting in increasing the demand in the market for sugar. d. and e. Everywhere because of drought corn will not be able to be supplied to all the industries that uses it as their source and hence result in the decline in the market for the goods which are complementary that depend on the production of corn.
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