The Drought in the Midwest Over the Summer Has Decreased

question 390

Multiple Choice

The drought in the Midwest over the summer has decreased the supply of corn and, as a result, brought a sharp increase in the price of corn. (Source: The Economist, August 4, 2012) The increase in the price of corn

• A) always increases consumer surplus.
• B) always decreases consumer surplus.
• C) does not affect consumer surplus because this change reflects only a movement along the demand curve.
• D) increases consumer surplus if demand is elastic and decreases consumer surplus if demand is inelastic.

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Definitions:

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False Reference

Referring to something that does not exist or is misrepresented, often leading to confusion or misunderstanding.

Fallacy

An erroneous argument or reasoning, often resulting from incorrect premises or invalid logic.