The Degree to Which Gasoline and Corn Prices Are Linked

question 40

Multiple Choice

The degree to which gasoline and corn prices are linked is dependent on

• A)consumer tastes for corn.
• B)consumer driving habits.
• C)how high gasoline prices are, because when they are high, corn-based ethanol becomes a more attractive substitute.
• D)government regulators.

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Definitions:

AVC

Average Variable Cost, which is the variable cost per unit of output.

Long-run Equilibrium

A state in which all factors of production and costs are variable, leading to a situation where economic profits have been normalized or eliminated due to competition.

Constant Costs

Costs that do not change with the level of output or activity within a certain range.

Short-run Supply Curve

A graphical representation showing the relation between the price of a product and the quantity of the product that a firm is willing and able to sell, given fixed resources.