Following a renewable fuels mandate in 2005- the demand for yellow cor.docx

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The document discusses the effects of a 2005 renewable fuels mandate on the price and quantity of yellow corn, the key ingredient in ethanol. The mandate caused demand for yellow corn to skyrocket. As a result, both the price and quantity of yellow corn increased immediately due to the higher demand.

Following a renewable fuels mandate in 2005, the demand for yellow corn, the key ingredient in
ethanol, skyrocketed. What is the immediate effect on the price and quantity of yellow corn?
Price increases, but quantity
decreases.
Price decreases, but quantity increases.
Price and quantity both decrease.
Price and quantity both increase.
Following a renewable fuels mandate in 2005, the demand for yellow corn, the key ingredient in
ethanol, skyrocketed. What is the immediate effect on the price and quantity of yellow corn?
Solution
price and quantity both increase.

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