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Anonymous asked in Social ScienceEconomics · 9 months ago

please help with my econs?

More than a decade ago, the Cambonesian government began stockpiling wheat because it introduced a minimum price policy where the state would purchase any resulting surplus from the nation’s wheat farmers. Recently, it was announced that the government would adjust the price of wheat sales downward in order to hasten the destocking of its huge stockpiles of wheat. Using an appropriate diagram, explain what would happen to quantity demanded, quantity supplied, and government spending, in Cambonesia’s wheat when the policy adjustment takes place. Who benefits? Who loses? Would consumers’ total expenditure on wheat be more like to rise or fall, as a result of this policy adjustment? Explain your reasoning.

(Hint: It is not necessary to discuss welfare implications involving consumer surplus or producer surplus)

1 Answer

  • Oiy
    Lv 6
    9 months ago

    A sale of government stockpile will cause the supply curve to shift to the right. The price would go downward, while the quantity would increase. Farmers are the looser, Exporters and consumers are the gainer The government is also the gainer to get more money in the pocket and to reduce the cost of the warehouse.

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