More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams.

Need a paper written? Our academic experts can create an original essay on any subject for ~~$13.00~~ $11/page Learn More

The fluctuations in the price of ethanol affect the market for sugar through the effect of related products. This would cause the demand curve for ethanol to shift either to the right or to the left, mutatis multibus. Related products can either be (1) complements; or (2) substitutes.

Effect of the fluctuation in the price of sugar on the market for ethanol.

Substitutes are different items that buyers can use for the same purpose, whereas complements are products that are used together. From the case under study, it is apparent that ethanol and sugar are complements. If the price for one complimentary good goes up, the demand for the other item goes down, mutatis multibus.

The same happens when the price of one product goes down, and the demand for the other product goes up, mutatis multibus. In this case, an increase in the price of sugar results in a decrease in the demand for ethanol, mutatis multibus. This effect will cause the demand curve for ethanol to shift to the left, as shown in figure 1.

According to the figure, SS is the supply curve of ethanol, and DD0 is the demand curve of ethanol. When the price of sugar increases, the demand for ethanol goes down. Hence, the demand curve of ethanol will shift to the left to DD1. Therefore, the quantity demanded fried tofu decreases from Q0 to Q1.

Rate the answer:

Further research on topic

Market Equilibrium: Demand and Quantity Demanded

Answer by Academic.tip's expert

An answer to this question is provided by one of our experts who specializes in business & economics. Let us know how much you liked it and give it a rating.

Cite this page

Select a citation style:

References

Academic.Tips. (2023) 'More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams'. 13 March.

Reference

Academic.Tips. (2023, March 13). More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams. https://academic.tips/question/more-than-90-percent-of-the-worlds-ethanol-is-made-by-fermentation-using-sugar-from-plant-material-explain-how-the-market-for-ethanol-may-impact-the-market-for-sugar-used-in-confectionery-i/

References

Academic.Tips. 2023. "More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams." March 13, 2023. https://academic.tips/question/more-than-90-percent-of-the-worlds-ethanol-is-made-by-fermentation-using-sugar-from-plant-material-explain-how-the-market-for-ethanol-may-impact-the-market-for-sugar-used-in-confectionery-i/.

1. Academic.Tips. "More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams." March 13, 2023. https://academic.tips/question/more-than-90-percent-of-the-worlds-ethanol-is-made-by-fermentation-using-sugar-from-plant-material-explain-how-the-market-for-ethanol-may-impact-the-market-for-sugar-used-in-confectionery-i/.

Bibliography

Academic.Tips. "More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams." March 13, 2023. https://academic.tips/question/more-than-90-percent-of-the-worlds-ethanol-is-made-by-fermentation-using-sugar-from-plant-material-explain-how-the-market-for-ethanol-may-impact-the-market-for-sugar-used-in-confectionery-i/.

Work Cited

"More than 90 percent of the world’s ethanol is made by fermentation using sugar from plant material. Explain how the market for ethanol may impact the market for sugar used in confectionery. Illustrate your argument using the appropriate diagrams." Academic.Tips, 13 Mar. 2023, academic.tips/question/more-than-90-percent-of-the-worlds-ethanol-is-made-by-fermentation-using-sugar-from-plant-material-explain-how-the-market-for-ethanol-may-impact-the-market-for-sugar-used-in-confectionery-i/.

Copy