Question

Which one of the following is most likely to result in an increase in producer surplus in the market for cow's milk? (WITH EXPLANATION PLEASE)

A) consumers switching from cow's milk to soya milk
B) health care highlighting problems of consuming cow's milk
C) an advert highlighting the benefits of cow's milk
D) an increase in indirect taxes charged on cow's milk

Answer 1

A because if the firm is switching from cow milk to soya milk, suppler will be threatened and will be motivated to produce in large supply