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In 2012, the governors of several livestock producing states asked the U.S. Environmental Protection Agency (EPA) to suspend federal ethanol mandates due to a major
In 2012, the governors of several livestock producing states asked the U.S. Environmental Protection Agency (EPA) to suspend federal ethanol mandates due to a major drought (Peterka, Amanda, \"EPA Denies Waver of Cornbased Fuel Requirement," Greenwire, November 16, 2012). The mandates require that gasoline be mixed with a specified amount of ethanol, which is produced from corn. Over 22% of the corn crop is used to make ethanol. The governors wanted more com used for feeding livestock and humans. The EPA rejected the requests because it was "highly unlikely" that waiving the volume requirements for ethanol would affect corn, food, and fuel prices. Use the estimated demand and supply functions to estimate how much a shift of the demand curve to the left by 22% would affect the price of corn. Let market supply of corn be 0 = 10.2 + 0.25p and market demand for corn be Q = 15.6 - 0.5p. If the demand curve for corn shifts to the left by 22%, then the equilibrium price of corn will change by Ap = $D. (Enter your response rounded to two decimai places and include a minus sign if necessary.)
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