Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise.Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?
A)The supply of corn would decrease and the equilibrium price of corn would increase.
B)The demand for corn would increase and the equilibrium price of corn would increase.
C)The demand for corn would decrease because consumers could afford to buy less wheat and corn.
D)The demand for corn would increase and the equilibrium price of corn would decrease.

Question

Quizplus · Accepted Answer

Since wheat and corn are substitutes, an increase in the price of wheat would lead to a higher demand for corn as consumers switch to the cheaper alternative. This would result in an increase in demand for corn, which would lead to a shift in the demand curve to the right, causing the equilibrium price of corn to increase. Option A is incorrect because the supply of corn is not affected by a change in the price of wheat. Options C and D do not follow the law of demand, which states that when the price of a good increases, the demand for that good decreases, and vice versa.

Suppose a Negative Technological Change in the Production of Disease-Resistant