Question

3. Special-interest groups, lobbying, and rent-seeking behavior The following graph shows the market for orange juice. 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 the grey field will change accordingly. Graph Input Tool Supply 88 Price (Dollars per gallon) Quantity demanded (Millions of gallons) Surplus (Millions of gallons) Quantity supplied (Millions of gallons) Shortage (Milions of gallons) PRICE (Dollars per gallon) 100 40 QUANTITY M 600 ontana

Answer 1

Answers

1st blank

$4

Without intervention equilibrium price is derived at the point where the supply curve and the demand curve intersects.

2nd Blank 50 ; 3rd blank $300

$1 6 the quantity demanded is 25 units and the quantity supplied is 75 units. As the quantity supplied is greater than quantity demanded there is an excess which the government would buy = 75-25 = 50units. Buying 50 units @ $6 would be 50 x6 =$300

Because the increase price of orange would hurt millions of consumers would not re elect their representatives.

As this reduces the consumer surplus by a huge margin

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