As the demand for corn increases to provide input for ethanol production,what is expected to happen to the price elasticity of corn supply?
A) It will decrease.
B) It will become zero.
C) It will increase.
D) It will not change.

Question

Quizplus · Accepted Answer

When demand for corn increases due to ethanol production, the price elasticity of corn supply is expected to decrease. This is because corn suppliers have limited time and resources to respond to the increased demand immediately. In the short run, it is difficult for suppliers to increase production, resulting in an inelastic supply curve. In the long run, as new suppliers enter the market, the supply curve becomes more elastic, but this process takes time.

As the Demand for Corn Increases to Provide Input for Ethanol