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The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate
A. increases, and producer surplus increases.
B. increases, and producer surplus decreases.
C. decreases, and producer surplus increases.
D. decreases, and producer surplus decreases.

Respuesta :

Nyctalus

Answer: Option D                      

                 

Explanation: Equilibrium price is the one where the demand curve and supply curve of the product intersect each other.

The announcement of the surgeon will decease the demand for the product, then market forces will come into play leading to a decrease in supply which ultimately leads to lower producer surplus due to lower sales and lower price.

Thus, the correct option is D .

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