Suppose that the supply and demand of wheat depend on the price ...

[pane00]

Suppose that the supply and demand of wheat depend on the price of wheat (p), the amount of annual rainfall (r), and the level of disposable consumer income (I).
 
  The equations describing the supply and demand curves are given by: QS = 20r + 100p QD = 4000 - 100p + 10I Sketch a graph of the supply and demand curves for wheat and show the effects of an increase in the quantity of rainfall. How does each curve shift (if at all) from the increase in rainfall? What does this shift do to the equilibrium price and quantity (increase/decrease)?

Question 2

If inflation turns out to be higher than was anticipated,
 
  A) debtors are helped.
  B) debtors are hurt.
  C) debtors are neither helped nor hurt.
  D) the effect on debtors cannot be predicted.

[zoeyesther]

Answer to Question 1

An increase in rainfall will shift the supply curve to the right (increase in supply). A change in rainfall does not change the demand curve (r does not appear in the equation). This will increase the equilibrium quantity and decrease the equilibrium price.

Answer to Question 2

A

[pane00]

Gracias!

[mochi09]

TYSM