Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the following table. Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to establish this price ceiling? Explain carefully the main effects. Demonstrate your answer graphically. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effects of this price floor?

Demonstrate your answer graphically. LO3.6

9. A price ceiling will result in a shortage only if the ceiling price is ____________ the equilibrium price. LO3.6

a. Less than.

b. Equal to.

c. Greater than.

d. Louder than.

Transcribed Image Text:

Thousands of Bushels Demanded 888 85 80 Price per Bushel $3.40 Thousands of Bushels Supplied 72 3.70 73 75 4.00 75 70 4.30 77 65 4.60 79 60 4.90 81