Relating to the Economics in Practice on page 257: Ethanol is a fuel produced from corn, and ethanol subsidies have increased the supply of corn. As a result, demand for farm land has ________. Further, the supply of other grains has ________.

Question

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Ethanol subsidies increase the demand for corn, which in turn increases the demand for land on which to grow corn, leading to an increase in the price of land. This makes it difficult for farmers to grow other crops that could potentially compete with corn. As a result, the supply of other grains decreases.

Relating to the Economics in Practice on Page 257: Ethanol