Suppose a Negative Technological Change in the Production of Disease-Resistant

question 181

Multiple Choice

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise.Holding everything else constant, how would this affect the market for corn (a substitute for wheat) ?

• A)The supply of corn would decrease and the equilibrium price of corn would increase.
• B)The demand for corn would increase and the equilibrium price of corn would increase.
• C)The demand for corn would decrease because consumers could afford to buy less wheat and corn.
• D)The demand for corn would increase and the equilibrium price of corn would decrease.

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Definitions:

Marginal Tax Rate

The additional tax liability a person faces divided by his or her additional taxable income. It is the percentage of an extra dollar of income earned that must be paid in taxes. It is the marginal tax rate that is relevant in personal decision-making.

Tax Liability

The total amount of taxes an individual or organization is legally obligated to pay to a taxation authority.

Taxable Income

The amount of income used to determine how much tax an individual or a company owes to the government.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxes according to federal, state, or local laws.