Answer to Question #59132 in Economics for Lachlan Smith

Question

Farmers can plant either corn or soybeans in their fields. Suppose that a new technology for converting corn into liquid fuel increases the demand for corn. Which of the following will be most likely to happen?
A. The supply of corn will increase, shifting the supply curve to the right.
B. The supply of soybeans will increase, shifting the supply curve to the right.
C. The price of soybeans will decrease, shifting the supply curve to the left.
D. The supply of soybeans will decrease, shifting the supply curve to the left.

Answer 1

If a new technology for converting corn into liquid fuel increases the demand for corn. The most likely to happen is the decrease of price of soybeans, which will cause the shift the supply curve to the left. So, the right answer is C. The price of soybeans will decrease, shifting the supply curve to the left.