Consumers eating higher food costs The price of milk rose about 21% from July 2006 to July 2007, while the price of frozen orange juice increased 31%. At the same time, with higher gasoline prices, the demand for ethanol increased. Because ethanol is made from corn, the price of corn rose, which in turn increased the price of bread, chicken, cheese, and the fast-foods that use cheese. As people in China and India become richer, they are eating more beef and chicken and less rice and tofu-another source of higher food prices in the United States. Source: USA TODAY, September 6, 2007 Draw a curve to show the effect of the higher price of corn on the market for milk. Label it. Draw a point at the new equilibrium price and equilibrium quantity. 4.00 3.50 3.00 2.50 2.00- 1.50 1.00- Price (dollars per gallon) 2.50 100 S D 140 110 120 130 140 150 160 170 Milk (thousands of gallons per day) 180
Consumers eating higher food costs The price of milk rose about 21% from July 2006 to July 2007, while the price of frozen orange juice increased 31%. At the same time, with higher gasoline prices, the demand for ethanol increased. Because ethanol is made from corn, the price of corn rose, which in turn increased the price of bread, chicken, cheese, and the fast-foods that use cheese. As people in China and India become richer, they are eating more beef and chicken and less rice and tofu-another source of higher food prices in the United States. Source: USA TODAY, September 6, 2007 Draw a curve to show the effect of the higher price of corn on the market for milk. Label it. Draw a point at the new equilibrium price and equilibrium quantity. 4.00 3.50 3.00 2.50 2.00- 1.50 1.00- Price (dollars per gallon) 2.50 100 S D 140 110 120 130 140 150 160 170 Milk (thousands of gallons per day) 180
Chapter4: Supply And Demand: An Initial Look
Section: Chapter Questions
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Transcribed Image Text:Consumers eating higher food costs
The price of milk rose about 21% from July 2006 to July 2007, while the
price of frozen orange juice increased 31%. At the same time, with
higher gasoline prices, the demand for ethanol increased. Because
ethanol is made from corn, the price of corn rose, which in turn increased
the price of bread, chicken, cheese, and the fast-foods that use cheese. As
people in China and India become richer, they are eating more beef and
chicken and less rice and tofu-another source of higher food prices in
the United States.
Source: USA TODAY, September 6, 2007
Draw a curve to show the effect of the higher price of corn on the market
for milk. Label it.
Draw a point at the new equilibrium price and equilibrium quantity.
4.00
3.50
3.00-
2.50
2.00
1.50
Price (dollars per gallon)
2.50
S
D
140
1.00-
100 110 120 130 140 150 160 170 180
Milk (thousands of gallons per day)
>>> Draw only the objects specified in the question.
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