A Subsidy to Wheat Farmers Decreases the Price of a Bushel

question 45

Multiple Choice

A subsidy to wheat farmers decreases the price of a bushel of wheat from $2.50 to $2 per bushel. Prior to the subsidy, the equilibrium quantity of wheat sold was equal to 200,000 bushels. If the demand for wheat is known to be unit elastic, then after the imposition of the subsidy, _____ bushels of wheat would be sold in the market.

• A)100,000
• B)200,000
• C)240,000
• D)400,000
• E)300,000