Question

 2. Price controls in the Florida orange market

 The following graph shows the annual market for Florida oranges, which are sold in units of 90-pound boxes.

 Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

 In this market, the equilibrium price is _______  per box, and the equilbrium quantity of oranges is _______  million boxes.

 For each price listed in the following table, determine the quantity of oranges demanded, the quantity of oranges supplied, and the direction of pressure exerted on prices in the absence of any price controls.

 True or False: A price ceiling below $25 per box is not a binding price ceiling in this market. (Economists call a price ceiling that prevents the market from reaching equilibrium a binding price ceiling.)

•  True

•  False

Answer 1

The equilibrium price is : 25 and equilibrium quantity is: 150

Price	Quantity Demanded	Quantity Supplied	Pressure on prices
30	135	165	To Decrease
20	165	135	To increase

False : As the price ceiling which is below the equilibrium price is the effective or binding price ceiling.