The Market for Soybeans Is Characterized by = 18

question 25

Multiple Choice

The market for soybeans is characterized by = 18 - P_s and = P_s - 0.5P_c, where Q_s is the quantity of soybeans in millions of bushels, P_s is the price per bushel of soybeans, and P_c is the price per bushel of corn. The market for corn is characterized by = 18 - P_c and = P_{c -} 0.5P_s, where Q_c is the quantity of corn in millions of bushels. Suppose the government strengthens the mandate for the use of corn-based ethanol, increasing the demand for corn by 6 million bushels at any given price. In general equilibrium, the equilibrium price of corn is _____, and the equilibrium quantity of soybeans is _____.

• A) $14; 4 million bushels
• B) $12.80; 5.2 million bushels
• C) $13.50; 7 million bushels
• D) $10.40; 8.6 million bushels

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