Question1

Braziliancompriceshavewitnessedanotherroundoffallingpricesinrecentdaysasfarmersmovetounloadsomeoftheircomstocksaheadofsoybeanharvesting.

"On the seller side, some analyze the need to cash out and others are more willing to negotiate,aiming to free up warehouse space for the entry of the summer [soybean] harvest. In addition,exports remain sluggish, and estimates released last week by Conab [Brazilian government's foodsupply and statistics agency] indicated possible good productivity in the 2021-22 harvest," BrazilbasedCenterforAdvancedStudies onAppliedEconomics,orCEPEA,said.

Brazil's com exports to date in the marketing year 2020-21, which runs February 2021-January2022,totalled 12.3millionmetrictonasofOctober,down46%fromthesameperiodofthepreviousyear,customsdatashowed.

Drought and frost lead to extensive yield losses in com crop in MY 2020-21, while high domesticcompricesreducedthesupplyavailableforexport.

However, the drop in domestic corn prices and the appreciation of the dollar against the localcurrency mayattractnewinterestforexports,thecountry'snationalagriculturalagency Conabsaidinitsweeklyreport.The continuousinflowofimportswasalsoweighingoncornprices.

ByMugunthanKesavan-17November2021

Source:https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/111721-brazil-corn-watch-prices-fall-as-producers-look-to-reduce-stocks

Required:

1. Discuss FOUR (4)factors separately that caused the fluctuation in the equilibrium priceof corn based on actual events within the last five years using a demand and supplydiagram. (16Marks)
2. The short-run price elasticity of demand is 0.01. The quantity demanded for corn is 383million metric ton at the current price of US$151.00. Calculate the quantity demanded ifthepricepermetrictonis$161.00.(2Marks)
3. Discuss how the knowledge of income-elasticity of demand helps managers in makingbusinessdecisions.(2Marks)

(Total: 20Marks)