Which of the following would lead to a short-run market surplus for tomatoes? a. A decrease...

Which of the following would lead to a short-run market surplus for tomatoes?

	a.	A decrease in the number of tomato growers.
	b.	An increase in the price of potatoes.
	c.	A new government study shows that tomatoes have a greater risk of contamination from salmonella.
	d.	The price of tomatoes increases.

Solutions

Expert Solution

The correct answer is (b) An increase in the price of potatoes.

In the short run market surplus for tomatoes will increase If either market supply shift to the right or Market demand will shift to the right.

A decrease in the number of tomato growers means there are lesser amount of supply and hence supply will shift to the right and thus this will decrease market surplus.

An increase in the price of potatoes and considering potatoes and tomatoes as substitute this will shift market demand curve to the right because as price of substitute good increases then demand of good under consideration will increase and hence shift to the right. Thus this will increase short run market surplus and hence this is the correct option.

Increase in own price will result in movement along demand and supply curve and hence this will also not result in increase in market surplus.

Similarly, A new government study shows that tomatoes have a greater risk of contamination from salmonella will also not result in increase in market surplus.

Hence, the correct answer is (b) An increase in the price of potatoes.

Rahul Sunny answered 7 months ago

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