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andrezito [222]
3 years ago
14

Suppose the current market price of corn is $3.75 per bushel. Your firm has a technology that can convert 1 bushel of corn to 3

gallons of ethanol. If the cost of conversion is $1.60 per bushel, at what market price of ethanol does conversion become attractive? The price in which ethanol becomes attractive is ($3.75 + $1.60 / bushel of corn) / (3 gallons of ethanol / bushel of corn) = $1.78 per gallon of ethanol.
Business
1 answer:
ipn [44]3 years ago
7 0

Answer:

$1.78 per gallon of ethanol

Explanation:

The market price in which the conversion of ethanol becomes attractive is:

($3.75 + $1.60 / bushel of corn) / (3 gallons of ethanol / bushel of corn)

= $1.78 per gallon of ethanol.

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