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Over a six-month period in 2007, the price of corn increased by almost 70% as a result of increased demand for ethanol biofuel.

a. As a result of the price increase in corn, the of corn would . At the same time, the amount of acreage used in corn production would
b. Which of the following would be the most likely cause of the change in the amount of acreage used in corn production?
A. The higher price signals suppliers that corn is becoming more valuable.
B. Consumers directly inform suppliers of the increased demand for corn.
C. The government mandates that U.S. corn producers increase the acreage they devote to corn production to keep up with demand.
D. Economists publish reports in trade magazines informing farmers of the increased demand for corn.

User Mike Muller
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Answer:

a. As a result of the price increase in corn, the quantity supplied of corn would increase. At the same time, the amount of acreage used in corn production would increase.
The most likely cause of the change in the amount of acreage used in corn production is the higher price signals suppliers that corn is becoming more valuable.

Step-by-step explanation:

Corn is an input for ethanol biofuel. An increase in demand for ethanol biofuel results in an increase in the demand for corn. As more ethanol is being produced, more corn is used in the production process.

The increase in the demand for corn increases the price of corn. As the price of corn increases, there is an increase in the quantity supplied of corn. Farmers are growing larger quantities of corn, which results in an increase in the acreage used for corn production.

An increase in price causes a movement along the supply curve. It does not cause a shift of the supply curve.

Consumers do not directly inform farmers of their increase in the demand for corn. Price serves as the market signal. Consumers are willing to pay a higher price for corn, showing that they value corn more.

The government does not generally regulate what specific crop is grown on private farmland. Furthermore, economists may publish predictions, but farmers are most responsive to changes in market price.

User Teresita
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