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1、ProblemsandApplications1.IfanearlyfreezeinCaliforniasoursthelemoncrop,thesupplycurveforlemonsshiftstotheleft,asshowninFigure7-5.TheresultisariseinthepriceoflemonsandadeclineinconsumersurplusfromA+B+CtojustA.SoconsumersurplusdeclinesbytheamountB+C.Figure7-5Inthemarketforl
2、emonade,thehighercostoflemonsreducesthesupplyoflemonade,asshowninFigure7-6.TheresultisariseinthepriceoflemonadeandadeclineinconsumersurplusfromD+E+FtojustD,alossofE+F.Notethataneventthataffectsconsumersurplusinonemarketoftenhaseffectsonconsumersurplusinothermarkets.Figur
3、e7-62.AriseinthedemandforFrenchbreadleadstoanincreaseinproducersurplusinthemarketforFrenchbread,asshowninFigure7-7.Theshiftofthedemandcurveleadstoanincreasedprice,whichincreasesproducersurplusfromareaAtoareaA+B+C.Figure7-7TheincreasedquantityofFrenchbreadbeingsoldincreas
4、esthedemandforflour,asshowninFigure7-8.Asaresult,thepriceofflourrises,increasingproducersurplusfromareaDtoD+E+F.Notethataneventthataffectsproducersurplusinonemarketleadstoeffectsonproducersurplusinrelatedmarkets.Figure7-83.a.Bert’sdemandscheduleis:PriceQuantityDemandedMo
5、rethan$70$5to$71$3to$52$1to$33$1orless4Bert’sdemandcurveisshowninFigure7-9.Figure7-9b.Whenthepriceofabottleofwateris$4,Bertbuystwobottlesofwater.HisconsumersurplusisshownasareaAinthefigure.Hevalueshisfirstbottleofwaterat$7,butpaysonly$4forit,sohasconsumersurplusof$3.Heva
6、lueshissecondbottleofwaterat$5,butpaysonly$4forit,sohasconsumersurplusof$1.ThusBert’stotalconsumersurplusis$3+$1=$4,whichistheareaofAinthefigure.c.Whenthepriceofabottleofwaterfallsfrom$4to$2,Bertbuysthreebottlesofwater,anincreaseofone.Hisconsumersurplusconsistsofbotharea
7、sAandBinthefigure,anincreaseintheamountofareaB.Hegetsconsumersurplusof$5fromthefirstbottle($7valueminus$2price),$3fromthesecondbottle($5valueminus$2price),and$1fromthethirdbottle($3valueminus$2price),foratotalconsumersurplusof$9.Thusconsumersurplusrisesby$5(whichisthesiz
8、eofareaB)whenthepriceofabottleofwaterfallsfrom$4to$2.4.a.Ernie’ssupplyscheduleforwateris:PriceQuantityS