Question

How will the invisible hand move corn prices in re-sponse to:a. a flood that destroys a great deal of the corn crop?b. a rise in the price of wheat (a substitute for corn)?c. a change in consumer tastes away from corn dogs toward hot dogs?d. an increase in the number of demanders in the corn market?

Answer 1

Answer:

a. a flood that destroys a great deal of the corn crop?

The flood decreases the supply of corn and shifts the supply curve to the left which increases the price and decreases quantity in the market.

b. a rise in the price of wheat (a substitute for corn)?

Substitute goods are purchased in substitution as a rise in the price of one increases the demand for other and vice verse.

The rise in price of wheat increases the demand for the corn which shifts the demand curve to the right and increases both price and quantity.

c. a change in consumer tastes away from corn dogs toward hot dogs?

The change in tastes decreases demand which shifts demand to the left and decreases price and quantity both.

d. an increase in the number of demanders in the corn market?

The increase in buyer increases demand and both price and quantity increase as demand curve shifts to the right.

Explanation: