Question

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to a. shift rightward. b. shift leftward. c. become flatter. d. remain unchanged.

Answer 1

The required "option is a) shift rightward".

Explanation:

According to the condition given that is when there is a decrease in the price of corn, the supply of ethanol will increase as there will be more production of ethanol.

• If the curve of supply shifts towards left it means there is a decrease in the production as well as supply of the ethanol.
• If the curve of supply shift towards right it means there is the an increase in the  production of ethanol.
• If the curve of supply is being unchanged or flattered it signifies that there will be more production of ethanol and supply will be less hence there will be no profit.

• Hence, the supply curve will shift rightward.