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Question

Much of the demand for U.S. agricultural output has come from
other countries. In 1998,
the total demand for wheat was
Q=3244-283P. Of this, total domestic demand was
Qd=1700-107P, and
domestic supply was Qs=1944+207P. Suppose the export demand for
wheat falls by 40 percent.

a. U.S. farmers are concerned about this drop in export demand.

What happens to the
free-market price of wheat in the United
States? Do farmers have much reason to worry?

b. Now suppose the U.S government wants to buy enough wheat to

raise the price to
$3.50 per bushel. With the drop in export
demand, how much wheat would the
government have to buy? How much
would this cost the government? Please do this step
by step so I
can understand how to solve this.

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