Refer to the information provided in Figure 9.7 below to answer the questions that follow. Figure 9.7
-Refer to Figure 9.7. Suppose demand for wheat is initially D2. If consumer incomes increase, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat, and individual profit maximizing firms will produce ________ bushels of wheat.
A) D3; increase; 15
B) D1; increase; 10
C) D3; decrease; 7
D) D1; decrease; 0

Question

Refer to the information provided in Figure 9.7 below to answer the questions that follow.  Figure 9.7
-Refer to Figure 9.7. Suppose demand for wheat is initially D2. If consumer incomes increase, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat, and individual profit maximizing firms will produce ________ bushels of wheat.
A) D3; increase; 15 
B) D1; increase; 10 
C) D3; decrease; 7 
D) D1; decrease; 0

Quizplus · Accepted Answer

An increase in consumer incomes will shift the demand curve for wheat to the right, from D2 to D3. This will increase the equilibrium price of wheat and individual profit maximizing firms will produce more wheat, resulting in a new equilibrium quantity of 15 bushels. Therefore, the correct choice is (A).

Refer to the Information Provided in Figure 9