Indicate equilibrium price and quantity before increase

Reference no: EM13243766

As oil price rose during 2006, the demand for the alternative fuelsincreased. Ethanol, one alternative fuel, is from corn. Accordingto an article in the Wall Street Journal, the price of tortillas,which are made from corn, also rose during 2006:" The pricespike[in tortillas] is part of a ripple effect from the ethanolboom."

a. Draw a demand and supply graph for the corn market and use it toshow the effect on this market of an increase in the demand forethanol. Be sure to indicate the equilibrium and quantity beforeand after the increase in the demand for ethanol.

b. Draw a demand and supply graph for tortilla market and use itshow the effect on this market of an increase in the price of corn.Once again, be sure to indicate the equilibrium price and quantitybefore and after the increase in the demand for the ethanol.

Reference no: EM13243766

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