Assume a drought in the Great Plains reduces the supply of wheat.Noting that wheat is a basic ingredient in the production of bread and that potatoes are a consumer substitute for bread, we would expect the price of wheat to:

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The reduced supply of wheat will lead to a rise in the price of wheat. As wheat is a basic ingredient in the production of bread, the higher cost of wheat will lead to a decrease in the supply of bread, which will cause the price of bread to increase. Consumers may then choose to substitute bread with potatoes, which will increase the demand for potatoes. Therefore, the price of wheat will rise, the supply of bread will decrease, and the demand for potatoes will increase.

Assume a Drought in the Great Plains Reduces the Supply