Following a renewable fuels mandate in 2005 the demand for


Following a renewable fuels mandate in 2005, the demand for yellow corn, the key ingredient in ethanol, skyrocketed.

a- What is the immediate effect of the increase in demand on the price and quantity of yellow corn?

b- Yellow corn and white corn (the key ingredient in corn tortillas) are substitutes in production. As a result of the changes

in the market for yellow corn, what happens to the market supply of white corn?

c- How does the changing supply of white corn affect its market price?

d- As the price of white corn changes, what effect does that change have on the supply of yellow corn? Indicate the likely effects on both the price and quantity of yellow corn produced.

e- Does the change in the price of white corn tend to push yellow corn prices and quantities back towards their initial values, or farther away from them?

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Business Economics: Following a renewable fuels mandate in 2005 the demand for
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