Steak and chicken are substitutes. A sharp reduction in the supply of steak would
A)increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken.
B)increase consumer surplus in the market for steak and increase producer surplus in the market for chicken.
C)decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.
D)decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.

Question

Quizplus · Accepted Answer

A sharp reduction in the supply of steak would increase its price, leading to a decrease in consumer surplus in the steak market. As steak and chicken are substitutes, consumers would shift their demand to chicken, increasing its price and thus increasing producer surplus in the chicken market.

Steak and Chicken Are Substitutes