Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

3. The Market Forces of Supply and Demand

Market Equilibrium

Microeconomics

3. The Market Forces of Supply and Demand

Market Equilibrium

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Multiple Choice

What happens in the market for corn if the price of wheat, a substitute in production, decreases?

Demand shifts to the left

Demand shifts to the right

Supply shifts to the left

Supply shifts to the right

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Verified step by step guidance

Identify the relationship between corn and wheat. They are substitutes in production, meaning that producers can switch between producing corn and wheat based on profitability.

Understand the effect of a decrease in the price of wheat. When the price of wheat decreases, it becomes less profitable for producers to grow wheat compared to corn.

Analyze the producer's response. As wheat becomes less profitable, producers are likely to allocate more resources to the production of corn, increasing the supply of corn.

Determine the shift in the supply curve. An increase in the supply of corn due to producers switching from wheat to corn production will cause the supply curve for corn to shift to the right.

Conclude the market effect. With the supply curve shifting to the right, there will be an increase in the quantity of corn supplied at each price level, potentially leading to a decrease in the market price of corn if demand remains constant.