posted by Mark on .
I have spent a few hours on this question. Can anyone help?
The demand for Healthy Wheat Cookies is downward sloping, while the supply is upward sloping. Healthy Wheat Cookies are a normal good produced mainly from wheat and sugar. The government recently put a price floor on wheat. If the price floor causes disequilibrium in the wheat market, explain what would likely happen to the quantity supplied and price of Healthy Wheat Cookies, given that nothing else changes, and explain why this would happen.
Just a suggestion:
Since there is a price floor on wheat (meaning that wheat cannot be sold under a certain price), wheat would be more expensive. In turn the people who make Healthy Wheat Cookies would produce less and would raise the price of Healthy Wheat Cookies, to make their revenue the same as it was when wheat was cheaper.