Covering Chapters 7 And 8 Max Points 50 Due Day 7 115

Covering Chapter 7 8 Maximum Possible Points 50due Day 7 1159p

Suppose we are analyzing the market for oranges in 2017. Graphically illustrate the impact of each of the following events on consumer or producer surplus. See the instruction video, "Week 3_Homework Guideline". In 2017, Wildfires destroyed a majority of orange farms, reducing the orange production substantially, and what would be the impacts on consumer surplus? (Graphical analysis + written discussions=100 words). The price of apple, orange substitute, decreased in 2017. What would be the impacts on producer surplus? (Graphical analysis + written discussions=100 words). The price of orange in 2018 is expected to rise dramatically compared to 2017. What would be the impacts on consumer surplus or producer surplus? (Graphical analysis + written discussions=100 words). The United States Census Bureau reported that household income dramatically increased in 2017. What would be the impacts on producer surplus? (Graphical analysis + written discussions=100 words). Note: Scan all graphs and copy them in a word or PDF document. Make sure you include everything in one word or PDF file, and multiple submissions are not allowed. I will return your assignment if you submit multiple submissions (multiple documents).

Paper For Above instruction

Analyzing the market for oranges in 2017 through graphical representation and written explanation reveals significant impacts of various events on consumer and producer surplus, crucial concepts in welfare economics. These events—wildfires destroying farms, shifts in substitute prices, anticipated price changes, and income variations—alter supply and demand, thereby influencing surplus measures and market efficiency.

Impact of Wildfires on Consumer Surplus

The destruction of a majority of orange farms due to wildfires in 2017 constituted a leftward shift in the supply curve, indicating a decrease in orange supply. Graphically, this results in a higher equilibrium price and a lower quantity of oranges available in the market. Consumer surplus, the area above the market price and below the demand curve, diminishes because consumers face higher prices and fewer oranges. The reduction in supply leads to a movement along the demand curve, decreasing consumer welfare due to increased prices and limited availability. Consequently, consumer surplus declines significantly, reflecting welfare loss for consumers who value oranges more than the new market price.

Impact of Decreased Price of Apples on Producer Surplus

When the price of apples, a substitute in consumption, decreases in 2017, consumers tend to substitute oranges with apples due to relative price changes. Graphically, this shift causes a leftward or downward movement in demand for oranges, as demand decreases. For producers, this results in a lower equilibrium quantity and price. Producer surplus—the area between the market price and the supply curve—is reduced because producers receive lower prices and sell fewer oranges. This decrease in producer surplus reflects diminished profitability and potential reductions in orange farm output, which could further impact market dynamics and producer welfare positively or negatively, depending on supply elasticity.

Impact of Rising Orange Prices in 2018

Anticipation of a dramatic rise in orange prices in 2018 generally leads to increased consumer willingness to purchase oranges at current prices, shifting the demand curve rightward. Graphically, this results in a higher equilibrium price and quantity in the market. Consumer surplus expands because consumers value oranges highly and are willing to pay more, increasing their welfare area on the graph. Conversely, for producers, the higher prices boost producer surplus, allowing producers to benefit from increased revenues. The overall market efficiency improves if supply can meet demand, but if not, shortages might occur. These price expectations elevate overall market welfare and benefit producers, though consumer surplus increases or decreases depending on elasticities and actual price changes.

Impact of Increased Household Income on Producer Surplus

When household income increases substantially, demand for oranges, considered a normal good, shifts rightward. Graphically, this demand increase causes a higher equilibrium price and quantity. The result is an expansion of producer surplus, as higher income levels enable consumers to purchase more oranges at elevated prices, increasing total revenues for producers. The rise in demand boosts market efficiency and welfare, especially when supply is responsive. This positive income effect enhances producer welfare, especially in the short term, by enabling producers to sell more at higher prices, which encourages increased production and investment in orange farming, further magnifying producer surplus.

Conclusion

Overall, changes in supply and demand due to natural disturbances, substitute price shifts, price expectations, and income variations significantly impact consumer and producer surplus. Wildfires decrease consumer surplus by reducing supply; decline in substitute prices diminishes producer surplus; expected price hikes increase both surpluses; and rising incomes elevate producer surplus through demand expansion. Graphical analysis consistently illustrates these effects, emphasizing the importance of understanding welfare changes for market efficiency and policy considerations. These shifts underscore how external shocks and economic variables influence market welfare, guiding strategic decisions for producers and policymakers alike.

References

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