Suppose land suitable for wheat production is highly inelastic. An increase in the demand for wheat bread will most likely
A) cause the prices of bread and wheat to increase but not affect the incomes paid to owners of wheat-growing land.
B) shift the demand curve for bread to the right and the supply curve for wheat to the left.
C) raise the price of land suitable for wheat production.
D) depress the incomes of owners of wheat growing land.

Question

Quizplus · Accepted Answer

When demand for wheat bread increases, the demand for wheat also increases. Since the land suitable for wheat production is highly inelastic, the supply cannot easily increase, leading to higher prices for the land.

Suppose Land Suitable for Wheat Production Is Highly Inelastic