in the market for avocados, drought and extreme hot weather would result in a ch
ID: 1162232 • Letter: I
Question
in the market for avocados, drought and extreme hot weather would result in a change in consumer and producer surplus. How are producer surplus and consumer surplus affected? Market for Avocados ? a. The hot weather and drought would result in the consumer surplus of which area(s)? OC. A O D. A, B, C, D, E, F, G, H, I b. The hot weather and drought would result in a loss of producer surplus equal to area(s) OA, J, F, G, ?B, E, G, H,L Quantity O c. C,E, F, G, H. L O D. J,F, C, E, G There is a gain of producer surplus equal to areals) OA. A, B, C, D, N. O c. B O D. A B, D,N Click to select your answer.Explanation / Answer
Hot weather and drought would shift the supply curve leftward from S0 to Sx.
Consumer surplus is the area above the price and below the demand curve.
Producer surplus is the area above the supply curve and below the price level.
(a) Earlier, the consumer surplus = A+B+C+E
After hot weather and drought : consumer surplus = A.
Hence, option(C) is correct.
(b) Loss in producer surplus is area = J,F,C,E,G . Hence, option(D) is correct.
(c) Gain in producer surplus = B,D,N. Hence, option(B) is correct.
2. After price floor, consumer surplus is the area above Pf and below demand curve. It is equal to A. Hence, option(D) is correct.
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