Question

1. wheat is a major source to make bread in the united states. how will a storm that destroys the wheat crop of a country most likely affect the price of bread? e.1.2

a. the price of bread will rise as the supply decreases but demand will stay the same
b. the price of bread will drop as the supply increases but demand will stay the same
c. the price of bread will rise as the supply decreased and the demand decreases

Explanation:

Wheat is a key input for bread. A storm destroying wheat reduces the supply of wheat, which in turn decreases the supply of bread. Since bread is a staple with stable demand (no factor in the scenario changes consumer demand), the reduced supply of bread relative to unchanged demand will drive up its price. Options b is wrong because supply decreases, not increases. Option c is wrong because demand does not decrease in this scenario.

Answer:

a. The price of bread will rise as the supply decreases but demand will stay the same