Question 55

Supply shifts to the left

The destruction of a significant portion of the year's wheat crop due to bad storms will lead to a decrease in the overall supply of wheat available in the market. Consequently, this reduction in supply will shift the supply curve for wheat to the left.

A) Supply shifts to the right

This option is incorrect because a rightward shift in supply would indicate an increase in the availability of wheat, which contradicts the scenario where a large portion of the crop has been destroyed. A rightward shift does not align with the effects of reduced supply due to bad storms.

B) Demand shifts to the left

This option is incorrect as well. A leftward shift in demand would indicate that consumers are less willing to buy wheat bagels at any given price, which is not a direct consequence of a decreased supply of wheat. The demand for wheat bagels is more likely to remain stable or even increase due to the perception of scarcity.

C) Supply shifts to the left

This option is correct. The destruction of the wheat crop means that there will be less wheat available to produce wheat bagels, causing the supply curve to shift to the left. This shift reflects a decrease in supply, which can lead to higher prices in the market for wheat bagels.

D) Demand shifts to the right

This option is incorrect because a rightward shift in demand would imply an increase in consumer desire for wheat bagels, which does not directly relate to the supply issues caused by the storm. While prices may rise due to reduced supply, this does not necessarily translate to an increased demand.

Conclusion

The correct answer is C, as the destruction of the wheat crop due to storms leads to a leftward shift in the supply of wheat, directly impacting the availability of wheat bagels. All other options fail to accurately capture the economic principle at play, as they either misinterpret changes in supply or demand in response to the situation described.