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Soybeans and corn are both used as animal feed. (70% of Soybeans are used as animal feed, and Corn is the primary animal feed in the US.) Also, on many farms, farmers can grow either soybeans or corn. Ethanol is a fuel derived from corn. Ceteris parabus: If demand for ethanol fuel increases causing the equilibrium price of corn to increase, what will happen to the market for soybeans

Respuesta :

Answer:

there would be a decrease in the equilibrium quantity and an increase in the equilibrium price of soybeans

Explanation:

if equilibrium price of corn increases, farmers would want to plant more corn. Due to the fact farmers  can grow either soybeans or corn, farmers would choose to grow corn. Thus the supply of soybeans would fall. this would shift the supply curve for soybeans to the left. As a result,  here would be a decrease in the equilibrium quantity and an increase in the equilibrium price of soybeans