Bert buys two bottles of water because he receives positive consumer surplus up to that point. If the price falls to $2, Bert will buy more bottles and have greater consumer surplus. An early freeze reducing the lemon supply causes supply to shift left, decreasing consumer surplus and increasing producer surplus. Falling production costs for stereos most benefits consumers through increased consumer surplus. If a new technology decreases demand for stereos, consumer surplus decreases while producer surplus either remains the same or decreases depending on how much demand shifts left.

1. 1.
A)
B) Bert only buys two bottles of water because he has a positive consumer
surplus until be buys the 3rd bottle of water.
C) If the price falls to $2, Bert's consumer surplus and quantity demanded
increases.
2.
If the early freeze sours the lemons, then there are going to be less of them. So
the supply shifts to the left (decreases). Is means the consumer surplus decreases
and the producer surplus increases.
3.
A) B)
C) Consumers benefit the most from falling production costs of stereos.

2. 4.
A)
B)
C)
i. Consumer surplus decreases.
ii. Producer surplus remains unchanged or decreases (depends on how far to the
left/how much demand decreases).