Assume That Corn and Soybeans Are Alternatives That Could Be

question 302

Multiple Choice

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will

• A) increase the supply of corn.
• B) increase the supply of soybeans.
• C) decrease the supply of soybeans.
• D) decrease the supply of corn.
• E) have no effect on the supplies of corn and soybeans.

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Definitions:

Price Ceiling

A legal maximum price that can be charged for a good or service, typically set by government to protect consumers.

Price Floor

A government or regulatory imposed minimum price above the equilibrium price, preventing prices from dropping too low.

Usury Laws

Regulations designed to protect consumers by capping the interest rate that lenders can charge on credit.

Loanable Funds

The supply of money that savers have made available to borrowers.