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Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest would decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice O increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice

Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest would decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice O increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Can you help me with this? Can you explain how to factor in consumer producer surplus is with substitute and complement goods? I thought that if bad weather reduce the orange harvest that would mean that supply would go down and that will increase the price of oranges. Can you explain this and also graph for me? I’m a visual learner. 
### Impact of Adverse Weather on Orange and Apple Juice Markets **Topic: Substitute Goods – Orange Juice and Apple Juice** **Scenario:** Orange juice and apple juice are considered substitutes. A situation is presented where bad weather sharply reduces the orange harvest. This type of adverse weather is expected to cause changes in both the orange juice and apple juice markets. The question posed is what effect this weather condition would have on the consumer and producer surpluses in these markets. **Question:** Bad weather that sharply reduced the orange harvest would ____________. **Options:** - ☐ decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice - ☐ increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice - ☐ decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice - ☑ increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice **Explanation:** Understanding the effects of bad weather on orange crops and its economic impacts requires analyzing both markets due to their substitutability. Here's a detailed look at the given options: 1. **Decrease Consumer Surplus in the Market for Orange Juice but Increase Producer Surplus in the Market for Apple Juice:** - **Consumer Surplus for Orange Juice:** A reduced orange harvest increases the price of orange juice, thereby decreasing the consumer surplus as fewer consumers will be able to afford it. - **Producer Surplus for Apple Juice:** As the price of orange juice rises, the demand for apple juice increases. This can potentially increase the price and quantity sold, thereby increasing producer surplus. 2. **Increase Consumer Surplus in the Market for Orange Juice and Increase Producer Surplus in the Market for Apple Juice:** - This option is logically inconsistent because a reduced orange harvest will most likely increase prices and reduce consumer surplus due to higher costs and decreased availability. 3. **Decrease Consumer Surplus in the Market for Orange Juice and Decrease Producer Surplus in the Market for Apple Juice:** - **Consumer Surplus for Orange Juice:** As above, it would decrease. - **Producer Surplus for Apple Juice:** This is inconsistent because an increase in demand for apple juice (a substitute) would likely increase producer surplus, not decrease it. 4. **Increase Consumer Surplus in the Market for Orange Juice but Decrease Producer Surplus
Transcribed Image Text:### Impact of Adverse Weather on Orange and Apple Juice Markets **Topic: Substitute Goods – Orange Juice and Apple Juice** **Scenario:** Orange juice and apple juice are considered substitutes. A situation is presented where bad weather sharply reduces the orange harvest. This type of adverse weather is expected to cause changes in both the orange juice and apple juice markets. The question posed is what effect this weather condition would have on the consumer and producer surpluses in these markets. **Question:** Bad weather that sharply reduced the orange harvest would ____________. **Options:** - ☐ decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice - ☐ increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice - ☐ decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice - ☑ increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice **Explanation:** Understanding the effects of bad weather on orange crops and its economic impacts requires analyzing both markets due to their substitutability. Here's a detailed look at the given options: 1. **Decrease Consumer Surplus in the Market for Orange Juice but Increase Producer Surplus in the Market for Apple Juice:** - **Consumer Surplus for Orange Juice:** A reduced orange harvest increases the price of orange juice, thereby decreasing the consumer surplus as fewer consumers will be able to afford it. - **Producer Surplus for Apple Juice:** As the price of orange juice rises, the demand for apple juice increases. This can potentially increase the price and quantity sold, thereby increasing producer surplus. 2. **Increase Consumer Surplus in the Market for Orange Juice and Increase Producer Surplus in the Market for Apple Juice:** - This option is logically inconsistent because a reduced orange harvest will most likely increase prices and reduce consumer surplus due to higher costs and decreased availability. 3. **Decrease Consumer Surplus in the Market for Orange Juice and Decrease Producer Surplus in the Market for Apple Juice:** - **Consumer Surplus for Orange Juice:** As above, it would decrease. - **Producer Surplus for Apple Juice:** This is inconsistent because an increase in demand for apple juice (a substitute) would likely increase producer surplus, not decrease it. 4. **Increase Consumer Surplus in the Market for Orange Juice but Decrease Producer Surplus
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