In 2012 a Severe Drought Raised the Price of Corn

question 391

Multiple Choice

In 2012 a severe drought raised the price of corn. For a farmer in Canada who harvested a normal crop because the farm was not affected directly by the drought, the increase in the price of corn

• A) increases the farmer's producer surplus.
• B) decreases the farmer's producer surplus.
• C) does not affect the producer surplus because this change is a movement along the farmer's supply curve and not a shift of the farmer's supply curve.
• D) increases producer surplus only if the farmer's supply is completely inelastic.