Question

1. The market for soybeans is initially in equilibrium. Because of “mad cow disease,”
producers decide to replace bone meal with soybeans in cattle feed. The likely effect is
that:
A) the equilibrium price and quantity of soybeans will rise.
B) the equilibrium price and quantity of soybeans will fall.
C) the equilibrium quantity of soybeans will rise, but we can't determine what will
happen to the equilibrium price.
D) the equilibrium price of soybeans will rise, but we can't determine what will
happen to the equilibrium quantity.

Answer 1

Demand curve will shift to the right so the price and the quantity will rise. It’s answer A): the equilibrium price and quantity of soybeans will rise.
Answer: A.