Some years ago, flooding along the Red River in Manitoba destroyed thousands of hectares of wheat.
a. Farmers whose crops were destroyed by the floods were much worse off, but farmers whose crops were not destroyed benefited from the floods. Why? Use fully labeled supply and demand diagram and explain.
b. What information would you need about the market for wheat to assess whether farmers as a group were hurt or helped by the floods? If necessary, use a new diagram to explain your point.