Draw and label a graph that depicts a downward-sloping demand curve and an upward-sloping supply curve in the market for corn...

Question

(Read the article: Soybean Prices Surge as South American Outlook Deteriorates)

Draw and label a graph that depicts a downward-sloping demand curve and an upward-sloping supply curve in the market for corn. Draw and label another graph that depicts a downward-sloping demand curve and an upward-sloping supply curve in the market for soybeans. Many farmers can grow either soybeans or corn on their land. Use your graphs to describe how the markets for corn and soybeans would change if the price of soybeans was expected to increase relative to the price of corn.  

Answer 1

As the article's byline states: Drought is pushing prices up, with shortfalls in production expected to boost demand for U.S. beans, there has been a decrease in global supply of soybeans. If US beans are unaffected, the demand for US grown beans will increase. For the soybeans market, it should be drawn with a supply decrease (shift to the left). This will also affect the corn market because some farmers will switch production from corn to soybeans. This will cause a decrease in the supply of corn, which will also push the market price of corn higher.