AP Microeconomics 2.2: Changes in Supply

Analyze how producer incentives, input costs, technology, and alternative outputs shift supply and change the market equilibrium.

[Maximum number: 1]

Corn is used as food and as an input in the production of ethanol, an alternative fuel. Assume corn is produced in a perfectly competitive market.

Soybeans are produced in a perfectly competitive market. Assume farmers can grow either corn or soybeans on the same land. What happens to the price of soybeans in the next planting season if the price of corn increases? Explain.

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MKT-3.D—Explain (using graphs as appropriate) producers’ (sellers’) responses to changes in incentives and technology question 1