Question

Consider the following events: Scientists reveal that consumption of oranges decreases the risk of diabetes and, at the same time, farmers use a new fertilizer that makes orange trees more productive. Explain what effect these changes have on the equilibrium price and quantity of oranges  

Answer 1

Focusing on the first statement " scientists reveal that consumption of oranges decreases the risk of diabetes " this will indicate or result into increase in the demand for oranges as more of the diabetic patients would want to eat oranges.

Second statement " farmers use a new fertilizer that makes orange trees more productive" this defines that now the supply will also increase as better productivity will increase the quantity supplied.

Both these situations would lead to the equilibrium point to shift upward and the quantity demanded and supplied will increase and so will the price increase on the equilibrium point.