Figure 3.1 The Market for Wheat

-Refer to Figure 3.1. To defend its support price of $7, the government must
A) purchase 8 million bushels of wheat at a cost of $56 million
B) purchase 12 million bushels of wheat at a cost of $84 million
C) sell 8 million bushels of wheat and receive revenues totaling $40 million
D) sell 12 million bushels of wheat and receive revenues totaling $84 million

Question

Figure 3.1 The Market for Wheat
 
-Refer to Figure 3.1. To defend its support price of $7, the government must
A) purchase 8 million bushels of wheat at a cost of $56 million 
B) purchase 12 million bushels of wheat at a cost of $84 million 
C) sell 8 million bushels of wheat and receive revenues totaling $40 million 
D) sell 12 million bushels of wheat and receive revenues totaling $84 million

Quizplus · Accepted Answer

The government must purchase wheat at a price above the market price to maintain the support price. At a support price of $7, the government must purchase 8 million bushels of wheat at a cost of $56 million.

Figure 3.1 the Market for Wheat