AP® Microeconomics · Free response

A competitive market for juice: consumer and producer surplus, then a rise in costs

write it first, then score yourself point by point

Short free-response question · four-function calculator · 5 points · about 12 minutes

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The question

Name: ______________________   Date: ____________   A competitive market for juice: consumer and producer surplus, then a rise in costs (5 points)

The market for bottles of fresh juice in Corlin, an invented city, has many sellers and many buyers. Demand is a straight line that reaches zero at $12 a bottle, supply is a straight line that starts at $2 a bottle, and the market is in equilibrium at $6 with 400 bottles sold a day.

  1. (A) Calculate consumer surplus at the equilibrium. Show your work. [1 point]

  2. (B) Shade the area that represents producer surplus at the equilibrium. [1 point]

  3. (C) A disease damages fruit orchards, and the price of fruit used to make juice rises. Show the effect on the market for juice and the new equilibrium on a correctly drawn graph. [2 points]

  4. (D) Based on your answer to part C, identify what happens to consumer surplus, and explain. [1 point]