A Drought Destroys Much of the Peach Crop

question 96

Multiple Choice

A drought destroys much of the peach crop. As a result, consumer surplus in the peach market:

• A) increases.
• B) decreases.
• C) remains unchanged.
• D) equals the deadweight loss increase.

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Definitions:

Weighted Average

An analysis that incorporates the diverse levels of relevance of the numbers within a dataset.

Discount Rate

The discount rate applied in discounted cash flow analysis to calculate the current value of expected future cash flows.

Investment Project

A project undertaken by an individual or company involving an investment of resources aimed at generating financial returns.

Cost Of Capital

The rate of return that a business must achieve to generate value for its investors, essentially the cost of raising funds through debt or equity.