Question

Due to favorable weather conditions, the corn crop has been flourishing in the last few years. The following table presents the data:

Year	Quantity (millions of tonnes per year)	Price per Kg
2016	165	$8.00
2017	175	$6.00

1. What does the table signify about the market forces of demand and supply?
2. What factors are responsible for a price change in this example?

Answer 1

A)We observe that the quantity demanded and supplied has increased between the given period and at the same time the price has decreased. This implies that the supply must have increased during the concerned period. this increase in supply has a shift the supply curve to the right which has reduced the price from $8 to $6. Simultaneously it has increased to the quantity from 165 million tonnes to 175 million tonnes. It is assume that the demand curve has not changed because improved weather conditions will affect supply curve.

B) the factor responsible for price change in this case is the increase in supply and the factor responsible for increase in the supply is the improved weather condition or improved conditions conducive for production.