Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 10, Problem 4E
To determine
To describe: The impact of substitution effect of ethanol for petroleum on the price of corn, wheat and soybean.
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Students have asked these similar questions
Ethanol and sugar are both made from sugarcane, and ethanol can be used as a fuel substitute for oil. Increasing oil prices cause the demand for ethanol to increase. This will cause the ______ sugar to ______ and its price to ______.
demand for; increase; increase
supply of; decrease; increase
demand for; decrease; decrease
supply of; increase; increase
What effect will each of the following have on the supply of auto tires? A technological advance in the methods of producing tires.
Ethanol is again viewed as one part of a solution to the problem of shortages of petroleum products. Ethanol is made from a blend of gasoline and
alcohol derived from corn or sugarcane.
This program can be expected to
Show Transcribed Text
3. Exercise 10.4
the price of sugarcane.
Ethanol is again viewed as one pa
alcohol derived from corn or suga
This program can be expected to
J
not change
C
increase n to the problem of shortages of petroleum products.
decrease
the price of sugarcane.
Chapter 10 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- What effect will each of the following have on the supply of auto tires? An increase in the price of rubber used in the production of tires.arrow_forwardAnswer the question on the basis of the given supply and demand data for wheat. What would be the eguilibrium price for this market?arrow_forwardYou are the Economic Consultant for Zuku Farms Ghana Limited. Zuku produces cowpea in a community where producers are able to switch back and forth between cowpea and groundnut depending on market conditions. Consequently, you were tasked by the management of Zuku and you estimated the demand function for cowpea as follows: where is the quantity of cowpea demanded in bags per month, is the average price of cowpea in Ghana Cedis, is the average price of groundnut in Ghana Cedis, and Y is the income of consumers. Assuming is initially GH¢31.00 per bag, Y is GH¢1001.50. Also that your estimated supply function for cowpea is as follows: QS = -25 + 3.5PC -1.5Pf – 0.5Pg + 0.25R Where Qs is the quantity supplied of cowpea in bags, Pc and Pg are as defined above, Pf is the price of fertilizer per bag, R is the amount of rainfall (in inches). If Pf = GH¢10, R= 40 inches and Pg= GH¢31.00 Find the resulting supply function for cowpea and determine the equilibrium price and quantity.…arrow_forward
- MicroEconomics Practice: Ethanol is a motor fuel manufactured from corn. Ethanol and Gasoline are both used independently to power the engines of automobiles. Suppose bad weather negatively affects Corn production. Explain the effect of the bad weather on demand and supply of Corn. What is the effect on equilibrium price and Quantity. Explain the effect of changes in market for Corn on demand and supply of Ethanol. What is the effect on equilibrium price and Quantity. Explain the effect of changes in market for Ethanol on demand and supply of Gasoline. What is the effect on equilibrium price and Quantity.arrow_forwardMany countries are predominantly agricultural. how would changes in the supply of fertilizer affect the marginal product, and thus the income, of farmers in such countries?arrow_forwarda) Draw a graph with supply and demand curves that intersect and establish a market equilibrium price of $10 per unit and equilibrium market quantity of 100 units. Be sure to label your graph completely.arrow_forward
- How has the current economic growth affected the food industry in Canada?arrow_forwardIllustrate and explain the effect of the increased use of plant-based milk on the overall milk market.arrow_forward6. A record company estimates the industry demand for "hard alternative rock" albums to be: QD-1000 -125 P. It estimates the industry supply to be: QS = 125-P a. Given these estimates, what does it expect the industry output and price to be? b. A government commission announces that lyrics on "hard alternative rock" albums are offensive and should be banned. This causes consumers to purchase 20% more of such albums at any given price, compared to question 6a. What effect will this have on industry output and the price? c. Calculate the consumer surplus for parts a and b above. Are consumers better or worse off given the commission's recommendation?arrow_forward
- Q5arrow_forwardAfter it was named a "superfood", demand for kale increased dramatically (some sources say by 60% between 2007 and 2012). The entry of numerous new kale farmers into the industry has made the market perfectly competitive. The Canadian government would like to support kale farmers by offering one of five policies/programs; the first 4 options (A thru D) would (directly or indirectly) lead to an equilibrium market price of $2.25. • Opt A: introduce a price minimum or price floor Option B: introduce a price support Option C: introduce an incentive program Option D: introduce a payment in kind program As a fifth alternative, the government could also directly give farmers a monetary transfer that makes them just as well off as if the market price were $2.25, but without actually impacting the price or quantity. Option E: make a direct monetary transfer to farmers. Market demand and supply for kale is described as QD = 2,000 – 500P and Qs 800 + 100P. Calculate the benefits to kale farmers…arrow_forwardWhat price should you set for a product? This week we’re learning a useful numerical rule. You’re brought in to consult for a business that currently has a Marginal Cost of $5 for its product. It sells its product to customers for $9 per unit and the estimated price elasticity of demand is -1.5. Is the current price optimal? Should it be raised or lowered? To what? Support your answer using the markup pricing equations from the text. (MR = P*(1+(1/elasticity)) combined with the MR=MC rule).arrow_forward
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