Read this passage " The demand for corn has risen and so have the prices farmers can get for the crop. Corn stalks rise in front of red barn in Indiana where farmers are planting more of the crop because of increased demand. Indiana farmers are planning on planting more com for 2012. Purdue Agricultural Economics Professor Chris Hurt says this comes with the big surge in demand for corn mainly due to ethanol. "Farmers have been a little bit hesitant, ve been shifting in that direction, but maybe not as quickly as the market would like,\" he says. \"|1__s still offering very good premiums for corn production over soybeans and wheat.\" Hurt says corn prices continue to rise so rotation and acreage is shifting even more toward corn. As a result, acreage used for wheat or even cotton is shifting toward corn. He says the nation is looking at about 94 million acres in crop production and corn is Minnesota. The corn expansion may also moderate other food price incfea-sies: assuming the weather remains good for planting and harvesting." (11- Start with the reading above implied \"there is a positive demand shock in the market for etha nol\" and then write out in sentences the sequence of events, using appropriate language for describing the effects of price changes versus a change that shifts the supply or demand curve. Label everything in your graphs completely (prices, quantities, demand curves, supply curves, axis]. 02- Draw a diagram of the supply and demand shocks you describe here. Q3 part A- Read this passage below \" Mon, Jul 25 2011 * Airlines take advantage of tax authorization's lapse * For most travelers. ticket prices not likely to change * Analyst sees benefit as temporary (Adds LaHood comment; Updates shares} By Karen Jacobs ATLANTA. July 25 (Reuters) - Many U.S. airlines have raised fares in recent days to take advantage of a lapse in U.S. ticket tax collection after Congress failed last week to fully fund the Federal Aviation Administration budget, but passengers are not likely to notice any price difference. The expiration of the FAA reauthorization on Friday means some aviation taxes are no longer being collected. These include a 7.5 percent sales tax on U.S. air transportation and a 7.5 percent sales tax on the purchase of air miles. said fare watcher FareCompare.com. Additionally, taxes on jet fuel are also reduced. l'Friday evening we adjusted prices so the bottom line price of a ticket remains the same as it was before prior to the expiration of federal excise taxes. etc.," American Airlines AM R.N spokesman Tim Smith said by email. JetBlue Airways Corp (JBLU.O: Quote, Profile, Research, Stock Buzz} and Southwest Airlines Co (LUV.N: Quote. Profile, Research, Stock Buzz) began raising ticket prices by at least 7.5 percent on Friday, according to FareCompare.com. Other airlines, such as Delta Air Lines Inc (DALN: Quote, Profile, Research, Stock Buzz} and United Continental Holdings Inc (UALN: Quote, Profile, Research, Stock Buzz), boosted prices on Saturday. The changes could save consumers of 10 percent to 15 percent of the cost of a ticket, should the FAA-related tax relief be passed along, Rick Sway, chief executive of FareCompare.com, said on Monday. US. airlines have long complained about taxes and security fees, saying they cannot always pass them along to customers. The Air Transport Association, the top airline lobbying group, said that on a $300 ticket, about $61 goes to taxes and fees. ATA spokeswoman Jean Medina said consumers are not affected by the latest round of fare hikes because they will pay the same amount for tickets as they did last week. l'This short-term additional revenue for airlines, which does not mean a fare increase for consumers, benefits all stakeholders -- customers, employees and investors -- by temporarily improving tiny industry margins to better cover costs. and enable airlines to invest in their product and service," Medina said. Transportation Secretary Ray LaHood spoke with the ATA twice on Monday about the pricing, he told reporters in a conference call. l'lf this tax is not being collected, I don't believe the airlines should be charging people for this amount of money. I think that is not fair," he said. "I'm going to continue those discussions." Congress is currently debating raising the country's debt limit, but it still has the time to pass an extension, he said. LaHood, a former member of Congress, said he hoped an extension would be ready for President Barack Obama's signature late Monday or within the next few days. Ray [)1ng senior aerospace specialist at Maxim Group, said passengers will not notice the latest fare increases because the price they pay for tickets will not change. " Basically (airlines) are just charging what they think the consumer will pay to fill the seats,'I Newlsaid. malso said the benefit to airlines would be minimized if Congress reached a deal soon to resolve the partial FAA shutdown. l'lt looks to me like it's going to be very temporary,'I Msaid. \"So whatever effect it has, it's going to be very minor." Attempts failed on Friday to resolve the dispute over the FAA's funding, due to fighting between the political parties. Members of Congress hope to take up the issue on their return Monday. Shares of US. airlines were down on Monday in response to a growing perception that recent signs of renewed pricing power will fade after the peak summer travel season. The Arca airline indeLXAL was down 2.1 percent at the close of the market on Monday. United Continental was down 5.1 percent at $18.93 and US Airways Group Inc (LCC.N: Quote, Profile, Research, Stock Buzz) was off 4.4 percent at $6.50. Both stocks touched 52-week lows on the New York Stock Exchange on Monday. (Additional reporting by Kyle Peterson and Lisa Lambert; Editing by Richard Chang and Steve erofsky) Q3 part B- AFTER YOU READ THE ABOVE PASSAG: Draw a set of4 supply and demand graphs to represent extreme cases, where every graph has a tax on in a way that you can see how much of the tax's incidence falls on consumers versus that of producers. These four graphs should be: 1. Graph A: Very elastic demand; very inelastic supply. 2. Graph B: Very elastic demand1 very elastic supply. 3. Graph C: Very inelastic demand; very inelastic supply. 4. Graph D: Very inelastic demand; very elastic supply. If you've done this right. you can see in each case what these cases look like "with and without a tax" in this market. Which of the 4 graphs are most consistent with the _a_c_tu_al_ fag; provided by the reading? The graph you chose (and I think there is one correct one to choose) allows you to infer what the supplyldemand elasticities must be. Explain why those patterns of elasticities makes plausible sense in the context of the reading above. Q3 part c- Draw a diagram of the supply and demand shocks you describe here. Q3 part D- Multiple choice question: Which of the four graphs best explains the stylized facts of the News Analysis that the waiving of the tax had little effect on consumers and a "windfall" for producers? Graph C: Very inelastic demand; very inelastic supply. Graph B: Very elastic demand, very elastic supply. Graph A: Very elastic demand; very inelastic supply. Graph D: Very inelastic demand; very elastic supply