Consider the market for wheat, which is currently in equilibrium. Now, suppose a pest destroys most of this year's wheat crop. How will the market for wheat change as a result of the destruction?Supply will shift to the right.The equilibrium price will increase.The equilibrium quantity will decrease.The equilibrium price may or may not change.
A) II only
B) I and IV only
C) I, III, and IV only
D) II and III only

Question

Quizplus · Accepted Answer

Option I is incorrect because with the destruction of most of this year's wheat crop, the supply of wheat will be reduced, causing a shift in supply to the left, not to the right. 
Option II is correct because with the decrease in supply due to the crop destruction, the equilibrium price will increase. 
Option III is correct because with the decrease in supply, the equilibrium quantity will also decrease. 
Option IV is incorrect because the equilibrium price will definitely change due to the decrease in supply. So, the correct choices are II and III only. Hence, the answer is D.

Consider the Market for Wheat, Which Is Currently in Equilibrium