Suppose a Method Was Discovered to Cheaply Convert Corn into a Fuel

question 109

Multiple Choice

Suppose a method was discovered to cheaply convert corn into a fuel for automobiles that got better gas mileage than gasoline and caused less damage to the internal combustion engine.As a result,we would expect that

• A)the equilibrium price of corn would increase and equilibrium quantity would decrease.
• B)the equilibrium price and quantity of corn would decrease.
• C)the equilibrium price of corn would decrease and equilibrium quantity would increase.
• D)the equilibrium price and quantity of corn would increase.

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Definitions:

Full Employment

Full employment refers to a situation in the economy where all available labor resources are being used in the most efficient way possible, virtually eliminating involuntary unemployment.

Inefficient Outcome

A situation where resources are not allocated in the most valuable or productive way, often resulting from market failures or externalities.

Production Possibilities Frontier

A graphical representation that shows the combination of two goods that can be produced using all resources efficiently.

Inefficient Levels

Situations where resources are not being used in the best possible way from an economic perspective, leading to potential waste or losses.