(Table: Pumpkin Market) There are two consumers,Andy and Ben,in the market for pumpkins.Their willingness to pay for each pumpkin is shown in the table Pumpkin Market.There are two producers of pumpkins,Cindy and Diane,and their costs are also shown.The equilibrium price for pumpkins is $8 and the equilibrium quantity is 5.If Cindy sells one fewer pumpkin and Diane sells one more pumpkin than in equilibrium,total surplus will _ by _.

A) increase;$16
B) increase;$14
C) decrease;$1
D) decrease;$2

Question

(Table: Pumpkin Market) There are two consumers,Andy and Ben,in the market for pumpkins.Their willingness to pay for each pumpkin is shown in the table Pumpkin Market.There are two producers of pumpkins,Cindy and Diane,and their costs are also shown.The equilibrium price for pumpkins is $8 and the equilibrium quantity is 5.If Cindy sells one fewer pumpkin and Diane sells one more pumpkin than in equilibrium,total surplus will _____ by _____.

A) increase;$16
B) increase;$14
C) decrease;$1
D) decrease;$2

Phantom Fantasy · Accepted Answer

Final Answer : C, Explanation :  If Cindy sells one fewer pumpkin and Diane sells one more pumpkin than in equilibrium, the new quantity will be 4. At this new quantity, the willingness-to-pay of the last consumer who buys a pumpkin would be $9, but the cost of producing the last pumpkin would be $12. This means that the last pumpkin produced and sold would result in a deadweight loss of $3. Therefore, total surplus would decrease by $1 (the decrease in producer surplus of $4 minus the decrease in consumer surplus of $3).

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