wheat prices surged last week and could hit the items in your grocery basket by
ID: 1131697 • Letter: W
Question
wheat prices surged last week and could hit the items in your grocery basket by mid summer. It’s a case of drought in parts of the United States and in Europe, which have sparked fears of a supply crunch of wheat.uiz: Chapter 4 Quiz This his 1 pt 8 of 10 (3 supply ounch of wheat. Wreat prices surged last week and could hit the nerns in your grocery basket by mid-summer. It's a case of drought iparts ofthe United States and in Europe, which have sparked tears of why the drought will lead to a rise in the price of bread O A rse: the supply of bread wil decrease OB. me, the spply of bread wil increase D. rise; the demand for bread will decrease
Explanation / Answer
Answer: Option a. rise;the supply of bread will decrease.
As a result of the drought, the price of wheat will rise and in the market for bread, the price of bread will rise because the supply of bread will decrease.
Explanation: As we all know wheat is an important input in the production of bread. As a result of the drought there is a considerable reduction in the cultivation of wheat all over the country. This will lead to a scarcity in the availability of wheat for producing bread.Thus the amount of wheat produced will not be enough to meet the demand from the bread producers. As a result of this the price of wheat will go up.
On the other hand as a result of the drought bread production will also decrease because of a crunch in wheat supply. Thus in the bread market demand for bread will be greater than supply of bread. When more is demanded than what is Supplied, this will in turn result in increasing the price of bread.
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