Meat at the supermarket has contributed to increase in food prices in 2010, and high feed and fuel prices mean that steak will likely cost a lot more this fall. The price of feed has increased 50 percent and hay has doubled from two years ago. Based on this information, which of the following is true in the market for beef?
A) Consumer surplus will decrease.
B) Producer surplus will increase.
C) Equilibrium price will decrease.
D) Equilibrium quantity will increase.

Question

Quizplus · Accepted Answer

Higher feed and fuel costs increase production costs, leading to higher beef prices, reducing consumer surplus.

Meat at the Supermarket Has Contributed to Increase in Food