Asked by Dasia Monique' on Jul 26, 2024
Verified
Suppose the United States removes sugar quotas and the market price of sugar drops.If the demand curve for candy bars is downward-sloping,in the candy bar market we would expect the:
A) consumer surplus to increase.
B) consumer surplus to decrease.
C) consumer surplus to be unchanged.
D) deadweight loss to increase.
Sugar Quotas
Government-imposed limits on the amount of sugar that can be imported or produced, often to stabilize domestic prices.
Consumer Surplus
The disparity between what consumers are prepared to pay for a product or service and the actual amount they end up paying.
- Discern the variables that precipitate adjustments in consumer surplus.
- Identify the effects of external changes (e.g., harvests, policy changes) on market surplus.
Verified Answer
TS
Tushar Saini DahariaJul 30, 2024
Final Answer :
A
Explanation :
If the market price for sugar drops, candy bar producers will have lower costs of production, allowing them to decrease the price of candy bars. This will increase the quantity demanded of candy bars, resulting in an increase in consumer surplus. Therefore, choice A is the correct answer.
Learning Objectives
- Discern the variables that precipitate adjustments in consumer surplus.
- Identify the effects of external changes (e.g., harvests, policy changes) on market surplus.
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