In 1998, apparently partially due to the effects of warming in the Pacific Ocean (el nino), Washington State apple growers produced substantially more apples than in previous years. However, the farmers complained because prices fell as well as their incomes (which are tied directly to apple sales). Many of them wondered if they would survive financially.

a. Some commentators have noted how peculiar economics is: consumers apparently value the larger crop of apples less than a smaller crop. Ana- lyze this proposition, and explain what is happening in this market.

b. Many farmers indicated that because of the low prices, they would let the smaller and poorer grade apples simply rot in the field, and only ship the premium apples. Why would they do this? Why isn't it more profitable for them to ship the poorer grade apples and let the premium ones rot?