Chapter 4, Problem 9P

To determine

Concept introduction:

Storage: With the intention of saving, holding placement of materials or products in a place and releasing them at a later stage when there is a high demand for the product in the market is called storage.

Answer:

The answers are as under-

1. The consumer expenditure incurred on Pakistani wheat crop is $2billion per year.
2. The annual government expenditure incurred on Pakistani wheat crop is $1.60 billion per year.
3. Amount received by Pakistani wheat farmers is $3.60 billion per year.

Explanation:

Formula Used:

Annual Expenditure/Income=Quantity x Price per kilogram

Calculation: In the given case the price per kilogram of wheat is $0.20. Hence the expenditures and amount received by the farmers is calculated as under −

1. The quantity that consumers are willing to purchase is 10 billion kilograms. Hence, the annual consumer expenditure is
= Quantity x price per kilogram

= 10 billion x $0.20

= $2billion

2. As given in the question, the excess quantity will be purchased and stored by the government. Hence, the annual government expenditure is
= Quantity x price per kilogram

= 8 billion x $0.20

= $1.6billion

3. The quantity that farmers are willing to grow and harvest is 18billion kilograms. Hence, the amount received by them will be
= Quantity x price per kilogram

= 18 billion x $0.20

= $3.60 billion