Suppose the United States removes its sugar quotas and the market price of sugar drops.Since sugar is an input in candy,in the candy bar market,we would expect consumer surplus to:

Question

Quizplus · Accepted Answer

If the market price of sugar drops, the cost of inputs for candy production decreases, which leads to a decrease in the price of candy. As the price of candy decreases, the consumer surplus increases because consumers are willing to pay more for candy than the market price. Therefore, removing sugar quotas is likely to increase consumer surplus.

Suppose the United States Removes Its Sugar Quotas and the Market