Answered: 16. Given that the U.S. government…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 25P

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16. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: The government drops the mandatory requirement of minimum ethanol fuel content for cars.

b) Demand will increase.

h) Equilibrium Price will increase.

c) Demand will decrease.

g) Equilibrium Quantity will decrease.

j) Equilibrium Price and Quantity will remain unchanged.

d) Supply will increase.

i) Equilibrium Price will decrease.

a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes its requirements.

e) Supply will decrease.

f) Equilibrium Quantity will increase.

T) Equilibrium Quantity will increase.
QUESTION 16
16. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in
the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the
following event: The government drops the mandatory requirement of minimum ethanol fuel content for cars.
O b) Demand will increase.
Oh) Equilibrium Price will increase.
) Demand will decrease.
g) Equilibrium Quantity will decrease.
) Equilibrium Price and Quantity will remain unchanged.
U d) Supply will increase.
D) Equilibrium Price will decrease.
Oa) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be
affected unless the government changes its requirements.
O e) Supply will decrease.
f) Equilibrium Quantity will increase.
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