Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons?
A)Consumer surplus increases
B)Consumer surplus decreases
C)Consumer surplus is not affected by this change in market forces
D)We would have to know whether the demand for lemons is relatively elastic or inelastic to make this determination

Question

Quizplus · Accepted Answer

When the price of lemons rises due to a reduced supply from an early freeze, consumer surplus decreases because consumers are paying more for fewer lemons, reducing the overall benefit or satisfaction they derive from consuming lemons at a higher price.

Suppose There Is an Early Freeze in California That Reduces