CHAPTER 4

The following graph represents the market for wheat. The

equilibrium price is $20 per bushel and the equilibrium

quantity is 14 million bushels.

a. Explain what will happen i f the government establishes

a price ceiling of $10 per bushel of wheat in this market?

What if the price ceiling was set at $30?

b. Explain what will happen if the government establishes

a price floor of $30 per bushel of wheat in this market.

What i f the price floor was set at $10?