An article about record high avocado prices discussed how avocado crops had suff

Question

An article about record high avocado prices discussed how avocado crops had suffered from hot weather, droughts, and an invasive beetle that kills avocado trees. Use a demand and supply graph of the avocado market to illustrate the effect of the hot weather, droughts, and invasive beetle. How are producer surplus and consumer surplus affected? Source: Rafi Letzter, "Avocado Prices Just Hit a Record High, and Show No Signs of Coming Down. Here's Why," businessinsider.com, November 3, 2016 Market for Avocados So Sy Refer to the graph at right, and the shaded areas designated by letters A through N. a. The impact of the hot weather, drought, and an invasive beetle results in a consumer surplus in the market for avocados represented by area(s) OA. A OC. A, B, D,N O D. A, B, C, D. E,F.G, H, I Quantity

Explanation / Answer

As the trees of avocados are affected by hot weather, drougt and other weather conditions the supply of the avocados at current price will fall. That is the supply curve will shift to the left from So to Sx. The consumer surplus will therefore be represented by area A which is shaded in purple.

The correct option is A.

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