Consider the Market for Wheat, Which Is Currently in Equilibrium

question 9

Multiple Choice

Consider the market for wheat, which is currently in equilibrium. Now, suppose a pest destroys most of this year's wheat crop. How will the market for wheat change as a result of the destruction?Supply will shift to the right.The equilibrium price will increase.The equilibrium quantity will decrease.The equilibrium price may or may not change.

• A) II only
• B) I and IV only
• C) I, III, and IV only
• D) II and III only

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Definitions:

Debt

An amount of money borrowed by one party from another, under the agreement that it will be repaid, often with interest.

Common Stock

A type of security signifying ownership in a corporation and entitling the holder to a share of the company's profits, essentially a mode of holding equity in the corporation.

Dividend Growth Model

A method used to value a company's stock by using predicted dividends and factoring in the growth rate of the dividends.

Required Rate of Return

The lowest yearly percent gain anticipated by an investor from investing in a specific asset.