help me with question 13 please. thanks F1 3 2 am1 Sample Questions Class Figure

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help me with question 13 please. thanks

F1 3 2 am1 Sample Questions Class Figure 6 Price Date: 110 100 90 80 +- 70t Supply 60 Demand eAp 40 30 20 ?0 100-000 10 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 Qaity 13. Refer to Figure 6. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be a. $1,600. b. $600. c. $800. d. $ 1,200. 14. A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes a. increases, and the consumer surplus in the market for red wine increases. b, increases, and the consumer surolus in the market for red wine decreases.

Explanation / Answer

Old Producer Surplus =0.5*(50-20)*60 = 900

New Producer Surplus = 0.5*(70-20)*100 = 2500

Increase in Producer Surplus = 2500-900 = 1600

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