A Subsidy to Wheat Farmers Reduces the Price of a Bushel

question 247

Multiple Choice

A subsidy to wheat farmers reduces the price of a bushel of wheat from $2.50 to $2 per bushel. The equilibrium quantity of wheat sold prior to the subsidy was equal to 200,000 bushels. Predict the new equilibrium quantity of wheat after the imposition of the subsidy given that the demand for wheat is known to be unit elastic.

• A)​100,000 bushels
• B)​200,000 bushels
• C)​250,000 bushels
• D)​400,000 bushels

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