Question

+ Problem 4: Show/Draw graph(s) and movement of curve(s) (Demand/Supply) and briefly discu Suppose we are analyzing the market for oranges. Graphically using demand and supply lines illustrate the impact each of the following would have on demand or supply. Also, show how equilibrium price a equilibrium quantity would change and discuss why for each of the following. Remember to discuss yo results. a. What effect would a hurricane in Florida have to the oranges curve(s) and why? b. What effect would the lower price of apples have to the oranges curve(s) and why? c. What effect would a strike by orange union worker to the oranges curve(s) and why? d. If there are higher temperatures in the country what effect would those have on oranges curve(s) and why?

Answer 1

Ans) 1) A hurricane will destroy the crop of oranges. Due to which, supply will decrease. And supply curve will shift to the left. As a result, equilibrium price will increase while quantity will decrease.

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2) Apple and oranges are substitutes. So when price of apple decreases, demand for oranges decreases because people prefer cheaper alternative.

Demand curve will shift to the left and both price and quantity will decrease.

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3) Due to strike, harvesting of oranges will decrease and hence the supply will also decrease. Supply curve will shift to the left. Price will increase while quantity will decrease.

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4) High temperatures tend to destroy the plants. So supply will decrease.

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