Scenario 1 (length: as needed)
Consider the market for corn in the United States. Suppose that the mandated percentage of ethanol in gasoline is increased and at the same time a corn blight destroys a significant portion of the corn crop.
- Using a supply and demand diagram, show what happens to the equilibrium quantity and price of corn in the United States.
- Explain why you are moving the curve(s) that you are?
- Using a supply and demand diagram, show how the changes in the corn market would affect the market for wheat (a substitute for corn).