Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The federal government decides to no longer purchase wheat from farmers.(See Figure 29.4.)
A)a.
B)b.
C)c.
D)d.

Question

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The federal government decides to no longer purchase wheat from farmers.(See Figure 29.4.)
A)a. 
B)b. 
C)c. 
D)d.

Quizplus · Accepted Answer

The event of the federal government deciding to no longer purchase wheat from farmers will lead to a decrease in demand for wheat. This will shift the demand curve to the left. The equilibrium quantity of wheat will decrease, and the equilibrium price of wheat will decrease. This is represented by diagram C, where the demand curve shifts to the left, resulting in a new equilibrium point with a lower price and quantity.

Select the Letter of the Diagram in Figure 28