Suppose an unexpected freeze in Florida destroys 20% of the Florida orange crop. Using supply and demand theory answer each of the following. Be sure to explicitly state your assumptions in your response. a. What are the likely effects of the crop damage on Florida orange prices and output levels? b. How will the freeze affect the equilibrium price of California oranges?

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Business

Jada Baird

3 May, 04:41

Suppose an unexpected freeze in Florida destroys 20% of the Florida orange crop. Using supply and demand theory answer each of the following. Be sure to explicitly state your assumptions in your response. a. What are the likely effects of the crop damage on Florida orange prices and output levels? b. How will the freeze affect the equilibrium price of California oranges?

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Meza · Answer 1

Suppose an unexpected freeze in Florida destroys 20% of the Florida orange crop.-This results in the shift of the supply curve to the left resulting in an increase in the prices.

Explanation:

Suppose an unexpected freeze in Florida destroys 20% of the Florida orange crop.

a) What are the likely effects of the crop damage on Florida orange prices and output levels?

As a consequence of the unexpected freeze in Florida, the orange crops will get damaged. This will result in a decline in the supply of oranges in the market. Which will lead to a shift in the supply curve of orange to the left, resulting in an increase in the price of oranges, and a decline in its output level or the quantity sold/supplied in the market

b) How will the freeze affect the equilibrium price of California oranges

Due to the unexpected freeze the supply curve of the California oranges will shift to the left, which will result in an increase in the price of the California oranges (In this case the quantity demanded is more than the quantity supplied/sold)