The four diagrams on this page refer to theU.S market for wheatwhich can be thought of as perfectly competitive. Answer the following questions.

A study is published according to whichU.S.-grown wheat is superior to other grains in terms of nutrients and minerals. Dietitians start recommending more wheat in the diets.

Which of the diagrams accurately shows what would happen in theU.S. wheatmarketas a result?

a) Ab) Bc) Cd) D

The USDA outreach office at Iowa State University developsnew strain of wheat producing higher average yields. As part of the USDA program, the new seeds are distributed towheat farmers at no cost.Which of the diagrams accurately shows what would happen in theU.S. wheatmarketas a result?

a) Ab) Bc) Cd) D

If the previous events happen at the same time,

we expect the price of wheat in the U.S. to ___________________________

(increase, decrease, be uncertain?)

and the equilibrium volume of wheat traded in the U.S. market to ____________________ .

(increase, decrease, be uncertain?)

As a follow-up to prior questions on this page, what are your predictions regarding the equilibrium price and quantity in the market for baked goods?

Price will _______________________, quantity will __________________________

(increase, decrease, be uncertain?)(increase, decrease, be uncertain?)

Lastly, taking your answers to 1.4 and 1.5 into account, suggest two action items for a U.S.-based bakery chain.(Think of this as a mini action plan. Naturally, there is no single correct answer, but make sure your recommendations are logical and consistent.).