In 1980, the United States enforced export limits on grain shipments to the Soviet Union as a reaction to its military invasion of Afghanistan. If other countries do not boost their grain exports to the Soviets, which of the following outcomes is least likely to happen?

Show Answers

Grain prices in the Soviet Union would increaseThe Soviet consumers' surplus would declineGrain prices in the United States would increaseU.S. producers' export earnings would fallThe Soviet Union would import more grain from other countries

Explanation

When the U.S. restricts grain exports to the Soviet Union, and no other nations compensate by increasing their exports, grain supply to the Soviets decreases, causing prices there to rise and reducing consumer surplus. U.S. producers would see a drop in export revenues due to lower sales. However, grain prices in the United States are unlikely to rise because the export quota reduces demand abroad, easing pressure on domestic prices.