#10 Consider the market for wheat in Pakistan, illustrated in the graph at right
ID: 1091920 • Letter: #
Question
#10
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.
** I'm sorry I am unable to upload the graph**
Explanation / Answer
9,000,000,000 kilograms of wheat ( amount of wheat bought by consumers) * $ .24 per kilogram (the price of wheat) = 2.16 billion dollars in consumer expenditures
19,000,000,000 kilograms of wheat (amount of wheat produced by farmers and bought by the government or the consumers) * $.24 per kilogram (the price of wheat) = 4.56 billion dollars recieved by pakistani farmers for their wheat.
19,000,000,000 kilograms of wheat ( amount of wheat produced by farmers) - 9,000,000,000 (amount of wheat bought by consumers) = 10,000,000,000 kilograms of wheat left. As the government bought all of the remaining wheat at $.24 a kilogram, the annual government expenditures on the Pakistani wheat crop were 2.4 billion dollars (10,000,000,000 kilograms of wheat * $.24 per kilogram)
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