Question

The question below requires two diagrams: (And remember, you can make up numbers except for any that I give you to get you started!)

1. Say that the price of orange juice is 50 cents per quart and 500 million quarts are produced annually.

Draw a supply and demand diagram to explain what might happen if a crop disease killed half the orange trees.

Now assume that grapefruit tries were unaffected by the disease. draw a supply and demand diagram and what would happen to the price of grapefruit juice.

Answer 1

1. When half the orange trees are killed by the crop disease, the supply of oranges will fall and supply of orange juice will fall. The supply curve of orange juice will shift to the left, causing an increase in equilibrium price and reduction in quantity.

2. Grapefruits are substitutes for orange juice. When the price of orange juice increases, then the demand for grapefruit juice will increase. The demand curve for grapefruit juice will shift to the right, causing the equilibrium price of grapefruit juice to increase and quantity to increase.

market for orange juice , 9 RSS Qua bang duarts of orange juice) millissa grapefruit juice for - Market & P. Price per quart of grapefruit po Juice q ari Quantity (grape frent) in millionis .