More Than A Decade Ago The Cambonesian Government Began Stockpiling Wheat Because It Introduced A Minimum Price


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. Please use 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? Please explain the reasons. (It is not necessary to discuss welfare implications involving consumer surplus or producer surplus)