Sugarcane can be used to produce both granulated sugar and ethanol.Recent regulations in certain countries now permit a higher amount of ethanol to be added to gasoline.As a result of these changes, an economist would expect granulated sugar prices to ____, and quantity sold to ____.
A)rise; rise.
B)fall; fall.
C)rise; fall.
D)fall; remain the same.

Question

Quizplus · Accepted Answer

With the increase in demand for ethanol due to the higher amount permitted to be added to gasoline, more sugarcane will be used to produce ethanol. This will decrease the supply of sugarcane available for producing granulated sugar, leading to a rise in granulated sugar prices. However, since there is still a demand for granulated sugar, the quantity sold may decline but not necessarily to the same extent as the rise in price.

Sugarcane Can Be Used to Produce Both Granulated Sugar and Ethanol.Recent