Question:
What are annual consumer expenditures on the Pakistani wheat crop? $______billion (round your answer to two decimal places)
How much in total do Pakistani wheat farmers receive for the wheat they produce? $______billion (round your answer to two decimal places)
What are annual government expenditures on the Pakistani wheat crop? $____ billion (round your answer to two decimal places.
Answer:
a. $2 billion
b. $3.8 billion
c. $1.8 billion
Explanation:
Given
Government Support Price = $0.20 per kg of wheat
Customer Expected Purchase = 10Billion kg per year
Farmer's Capacity = 19Billion kg per year
a.
Annual Customer Expenditure = Customer Expected Purchase * Government Support Price
Annual Customer Expenditure = 10,000,000,000 * $0.20
Annual Customer Expenditure = $2,000,000,0000 ($2 billion)
b.
Amount Paid to Farmers = Farmers Capacity * Government Support Price
Amount Paid to Farmers = 19,000,000,000 * $0.20
Amount Paid to Farmers = $3,800,000,000 ($3.8 billionl
c.
Annual Government Expenditure = Amount Paid to Farmers - Annual Customer Expenditure
Annual Government Expenditure = $3,800,000,000 - $2,000,000,000
Annual Government Expenditure = $1,800,000,000 ($1.8 billion)
Meaning that, when the government bought all the remaining wheat at $0.20 per kilogram, the annual government expenditures on the Pakistani wheat crop were $1.8 billion
