1.This diagram illustrates the market for wheat in a hypothetical country, which is originally in equilibrium.

a) How would a severe drought affect this market? Suppose the government wants to keep the price at P*. Why might they want to do, and how might they achieve it? Suggest two policy instruments and explain how this would work.

b) Suppose we are back at the original equilibrium. If the world price of wheat is at P', how will access to the international market affect the citizens of this country?