Citrus Speculation and Forecasting, Inc., has been hired by a private consortium of orange growers to predict what will happen to the price and output of oranges under the conditions below. What are your predictions? For each part, sketch the graph showing the appropriate demand and supply analysis.
1. A major freeze destroys a large number of the orange trees in Florida.
2. The scientists in the agricultural extension service of the University of Florida discover a way to double the number of oranges produced by each orange tree.
3. The American Medical Association announces that drinking orange juice can reduce the risk of heart attack.
4. The price of grapefruit falls
Please see accompanying graphs.
1. At every price, suppliers will be to supply less than if there had been no freeze. The supply curve shifts left. This implies that the equilibrium price increases and the quantity demanded decreases.
2. This ...
This solution provides graphs and explanation for changes in supply and demand in each of these cases.