During 2009, the demand for gasoline had fallen, lowering its price. the Demand

Question

During 2009, the demand for gasoline had fallen, lowering its price. the Demand for ethanol had declined as well. Ethanalo producers, though, were asking the Evironmental Protection Agency (EPA) to raise the alloweable amount of ethanol in gasolin blends from 10 percent to 15 percent. If the EPA were to agree to this proposal, what would be the likely effect on tortilla prices?

a. decrease because the demand for ethanol will increase, shifting the supply curve for tortillas to the right.
b. decrease because the demand for ethanol will increase, shifting the supply curve for tortillas to the left.
c. increase because the supply of ethanol will increase, shifting the supply curve for tortillas to the left.
d. increase becuase the demand for ethanol will increase, shifting hte supply curve for tortillas to the left.
e. increase becuase the demand for ethanol will decrease, shifting the supply cuve for tortillas to the left.

Explanation / Answer

e. increase becuase the demand for ethanol will decrease, shifting the supply cuve for tortillas to the left.

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