Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: Development of new genetically engineered bacteria that can efficiently convert high cellulose biomass (grasses, wood chips, etc.) into ethanol. There will be multiple answers h) Equilibrium Price will increase. e) Supply will decrease. j) Equilibrium Price and Quantity will remain unchanged. d) Supply will increase. c) Demand will decrease. g) Equilibrium Quantity will decrease. f) Equilibrium Quantity will increase
14. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the
h) Equilibrium Price will increase. |
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e) Supply will decrease. |
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j) Equilibrium Price and Quantity will remain unchanged. |
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d) Supply will increase. |
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c) Demand will decrease. |
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g) |
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f) Equilibrium Quantity will increase. |
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a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes its requirements. |
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i) Equilibrium Price will decrease. |
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b) Demand will increase |
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