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.

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).