How will the invisible hand move corn prices in response to: ...

[imowrer]

How will the invisible hand move corn prices in response 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 people with access to the corn market?

Question 2

Refer to Table 8-18. What is the GDP deflator in 2016 if 2016 is the base year?
 
  A) 120 B) 118 C) 100 D) 87

[IRincones]

Answer to Question 1

a. Since a great deal of the corn crop has been destroyed by the flood, the supply curve for corn will shift leftwards and the price of corn will increase.
b. When the price of a substitute such as wheat increases, the demand for corn will increase. The demand curve will shift rightwards and the price of corn will increase.
c. Corn (not surprisingly) is an important input in the production of corn dogs. If consumers prefer fewer corn dogs, the demand curve for corn will shift leftwards and the price of corn will fall.
d. As more buyers enter the market, the demand for corn will increase. The demand curve will shift rightwards and the price of corn will increase.

Answer to Question 2

C

[imowrer]

Excellent

[lcapri7]

YES! Correct, THANKS for helping me on my review