Question 1

Read "Corn Prices Have Popped" By Michael Coon Apr 2, 2024

https://econeveryday.com/corn-prices-have-popped/

Reuters:https://www.reuters.com/markets/commodities/us-farmers-face-harsh-economics-with-record-corn-supplies-silos-2024-02-22

1. Draw industry supply and demand graphs to illustrate:
2. The expected effect of a dry summer on corn production and price.
3. The effect of the late summer rains on actual production and price.

4. Draw sample costs curves for an individual firm (MC, AVC, ATC, AFC) and demand for an individual firm. Show the effect of higher interest rates on the cost of storage.

Answer the discussion questions on econeveryday.com.

Discussion Questions:

• If corn farmers are experiencing economic losses in the short-run, what would you expect to happen to the equilibrium price and quantity of corn in the long-run? Explain.

• Suppose a corn farmer told you their accounting profit was positive, but their economic profit was negative. What do they mean by that?

• One of the farmers claimed to be switching to a different crop in order to "lose less money." If the farmer knows or expects that they will still lose money, why wouldn't they just grow nothing instead.