Orange juice and apple juice are substitutes.Bad weather that sharply reduces the orange harvest would
A)increase consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice.
B)increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice.
C)decrease consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice.
D)decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice.

Question

Quizplus · Accepted Answer

Bad weather that sharply reduces the orange harvest would decrease the supply of orange juice in the market, leading to an increase in its price. As a result, consumers would be worse off (decrease in consumer surplus) because they would have to pay a higher price for orange juice or choose to buy apple juice instead. On the other hand, the decrease in the supply of orange juice would increase the demand for apple juice, leading to an increase in its price and higher profits for apple juice producers (increase in producer surplus).

Orange Juice and Apple Juice Are Substitutes