Corn price is elastic or inelastic?

Answer 1

Corn, like many food items is (relatively) inelastic. Many people will continue to buy it regardless of price, as they need it for sustenance.

Actually, corn pricing is quite elastic, since the demand for corn encompasses at least five major purposes: human foodstuffs (excluding sweetners), food sweeteners, animal fodder, biofuels, and plastics-substitutes.

Corn, while a core staple of many diets, is quite replaceable by other grains, and thus, demand for corn for human consumption can often be satisfied by wheat or barley or rice instead.

Corn pricing has thus historically been quite elastic, with demand changing quickly depending on other substitute's pricing and new uses for corn. The elasticity of corn pricing is shown by the large change in demand when prices change in each of its primary markets: foodstuff corn demand is offset by foodstuff grain demand as corn prices increase; sweetener corn demand is offset by sugar demand; animal fodder demand is offset by hay, grains and synthetics; biofuel corn is replaced by grain or non-organics; and petrochemical platistics replace corn plastics.

In each of these cases, there is a ready source of alternative, which is at least reasonably comparable in pricing; thus, changes in corn's pricing directly effect the demand for corn, as people either chose the alternative more (when corn's price goes up), or chose corn over the alternative (as corn's price decreases).