Question

Consider the market for wheat in Pakistan, illustrated in the graph at right. In recent years, the government of Pakistan has established a support price for wheat of about $0.24 per kilogram of wheat.
At this price consumers are willing to purchase approximately 9 billion kilograms of wheat per year while Pakistani farmers are willing to grow and harvest approximately 19 billion kilograms of wheat per year. The government purchases and stores all surplus wheat.

What are annual consumer expenditures on the Pakistani wheat crop? $______billion (round your answer to two decimal places)

How much in total do Pakistani wheat farmers receive for the wheat they produce? $______billion (round your answer to two decimal places)

What are annual government expenditures on the Pakistani wheat crop? $____ billion (round your answer to two decimal places.

Answer 1

Answer:

a. Annual consumer expenditure

9,000,000,000* $0.24= $2.16 billion

b. farmers receive for wheat production

19,000,000,000* $0.24=$4.56 billion

c. government expenditure on wheat

total production by farmers minus total purchase by consumers (because excess production is stored by the government)

$4.56 billion - $2.16 billion = $2.46 billion