A Drought in California Destroys Many Red Grapes

question 29

Multiple Choice

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

• A)increases,and the consumer surplus in the market for red wine increases.
• B)increases,and the consumer surplus in the market for red wine decreases.
• C)decreases,and the consumer surplus in the market for red wine increases.
• D)decreases,and the consumer surplus in the market for red wine decreases.

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Definitions:

Labor Productivity

A measure of economic performance that compares the amount of goods and services produced (output) with the number of labor hours used to produce those goods and services.

Supply of Labor

Refers to the total hours that workers wish to work at a given wage rate, influenced by demographics, wages, and working conditions.

Aggregate Demand

The sum of all demand for products and services in an economy, indicating the total spending on goods and services at each price level.

Equilibrium Output

The level of output at which the quantity of goods produced equals the quantity of goods consumed in an economy, with no external pressures to change.