In 2017,a severe drought led to an increase in the price of corn.Farmer Lyle was not affected by the drought.In 2016 there was no drought.In 2017,Farmer Lyle's
A)consumer surplus increased.
B)producer surplus increased.
C)producer surplus increased and his consumer surplus increased.
D)consumer surplus decreased and his producer surplus increased.
E)supply of corn became perfectly elastic.

Question

Quizplus · Accepted Answer

Since Farmer Lyle was not affected by the drought, he was able to produce and sell corn at the same cost as in 2016. However, due to the increase in the price of corn caused by the severe drought, Farmer Lyle was able to sell his corn at a higher price in 2017, leading to an increase in his producer surplus.

In 2017,a Severe Drought Led to an Increase in the Price