Suppose hail storms damage vineyards in South Australia. The supply of grapes to local winemakers declines. What happens to consumer surplus in the market for South Australian wine?
A) it increases
B) there is no change
C) it decreases
D) it could rise or fall

Question

Quizplus · Accepted Answer

If the supply of grapes to local winemakers declines, there will likely be a decrease in the quantity of South Australian wine available in the market, which could lead to an increase in prices. This would result in a decrease in consumer surplus, as consumers would have to pay more for the same amount of wine.

Suppose Hail Storms Damage Vineyards in South Australia