Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the table below.
Thousands of Bushels Demanded
Price per Bushel
Thousands of Bushels Supplied
85
$3.40
72
80
3.70
73
75
4.00
75
70
4.30
77
65
4.60
79
60
4.90
81
Suppose that the government establishes a price ceiling of $3.70 for wheat.
1. Why might the government establish this price ceiling?
A. To encourage production
B. To control food prices
C. As a form of trade barrier
D. As income support for farmers
2. In a diagram, draw this price selling established at $3.70
3. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect of this price floor?
A. It will eliminate the market for wheat
B. It will create a shortage
C. It will create a surplus
D. It will establish equilibrium quantity
Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the table below.
| Thousands of Bushels Demanded | Price per Bushel | Thousands of Bushels Supplied |
| 85 | $3.40 | 72 |
| 80 | 3.70 | 73 |
| 75 | 4.00 | 75 |
| 70 | 4.30 | 77 |
| 65 | 4.60 | 79 |
| 60 | 4.90 | 81 |
Suppose that the government establishes a price ceiling of $3.70 for wheat.
1. Why might the government establish this price ceiling?
A. To encourage production
B. To control food prices
C. As a form of trade barrier
D. As income support for farmers
2. In a diagram, draw this price selling established at $3.70
3. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect of this price floor?
A. It will eliminate the market for wheat
B. It will create a shortage
C. It will create a surplus
D. It will establish equilibrium quantity
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suppose the total demand for wheat
| Thousands of Bushels Demanded | Price per Bushel | Thousands of Bushels Supplied |
| 85 | $3.40 | 72 |
| 80 | 3.70 | 73 |
| 75 | 4.00 | 75 |
| 70 | 4.30 | 77 |
| 65 | 4.60 | 79 |
| 60 | 4.90 | 81 |
Suppose that the government establishes a price ceiling of $3.70 for wheat.
a. Why might the government establish this price ceiling?
b. suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect of this price floor?
