Wheat Price Shock
The question
The market for bread is initially in equilibrium. A severe drought destroys much of the wheat harvest, sharply raising the price of wheat, a key input in bread production. Show the effect of this change on the market for bread, assuming all else is held constant. Show the effect on the Supply and Demand graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Wheat Price Shock: the worked answer
On the Supply and Demand graph, Supply shifts left.
Why Supply shifts left
Wheat is an input in producing bread, so a higher wheat price raises producers' per-unit costs. Input prices are a determinant of supply, so the supply curve shifts to the left as producers offer less bread at every price. Consumers' willingness and ability to buy bread at each price are unchanged, so the demand curve stays put.
What happens to the equilibrium
The equilibrium price of bread rises and the equilibrium quantity decreases.
The mistake students make on this one
Students frequently shift demand left as well, because bread gets more expensive and shoppers buy less of it. The higher bread price is the result of the supply shift, not a separate cause, so buyers simply move up along an unchanged demand curve.
On exam day
Check which market the question actually asks you to graph: the drought hits wheat, but the axes say bread, so wheat can only enter as a cost of production on the supply side.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Supply shifts left and every other curve on the Supply and Demand graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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