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-(Figure: The Market for Oranges in South Africa) Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and producer surplus will _____ to area _____.

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-(Figure: The Market for Oranges in South Africa) Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and producer surplus will _____ to area _____.

Quizplus · Accepted Answer

When the price falls from P1U1B1 to P1U1B0, producer surplus decreases from area M + N + O + P + Q to area M + N. Therefore, choice (B) is correct. Choices (A) and (C) are incorrect because they suggest that producer surplus will either fall or rise, which is not entirely accurate. Choice (D) is incorrect because it suggests that producer surplus will increase by both areas Q and M + N + O + P, which is not accurate.

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