Question

In: Economics

suppose in the current year there is a nation wide boom harvest for apple growers and...

suppose in the current year there is a nation wide boom harvest for apple growers and a killer frost throughout Florida. Which of the following statements correctly reflects the subsequent developments in the U.S. orange market?
a. both equilibrium output and price will increase.
b. both equilibrium output and price will decrease
c. both equilibrium output and price may decrease.
d. Equilibrium output will decrease and price may decrease.
e. Equilibrium price will decrease and output may increase.

Solutions

Expert Solution

Apples and Oranges are considered substitutes in the given question. The demand for a good is influenced by many factors such as the price of substitutes, weather conditions, customer tastes and the like. Now, oranges are required to be picked up from trees before the freeze as they risk loosing their texture and juiciness. Oranges need to be protected from frost conditions. Apples, on the other hand, survive cold conditions much better due to dormancy; apart from loosing storage life, frozen apples are easily edible once thawed.

In the given question, the excessive frost is likely to affect orange production and lead to a fall in the supply of oranges. A decline in the supply of oranges will increase the price of oranges and decrease the quantity demanded. The supply of Apples, on the other hand , is also likely to be affected due to the frost. However, the boom in Apple production is likely to exert downward pressure on the price of Apples and as a result the prices of Apples will go down. As Oranges are considered substitutes for Apples, the decrease in the prices of Apples will keep the prices of Oranges from reaching a certain level, thus balancing the rise in prices of Oranges due to shortage (caused by frost ).

Accordingly option D seems to fit the above explanation.- equilibrium output will decrease and price may decrease.


Related Solutions

Cotton growers in the nation of Zanzi export nearly 700,000 bales of cotton every year. Zanzi...
Cotton growers in the nation of Zanzi export nearly 700,000 bales of cotton every year. Zanzi is the home country for a major fabric manufacturing facility that exports high-quality cotton fabric around the world. The government imposed a quota of 1 million bales of cotton that can be imported into Zanzi every year. The local fabric manufacturer is lobbying the government to remove the quota on cotton. 1. Which of the following could be the government’s rationale for imposing the...
Key figures for Apple and Google follow. Apple Google $ millions Current Year One Year Prior...
Key figures for Apple and Google follow. Apple Google $ millions Current Year One Year Prior Two Years Prior Current Year One Year Prior Two Years Prior Net income $ 48,351 $ 45,687 $ 53,394 12,662 19,478 16,348 Income taxes 15,738 15,685 19,121 14,531 4,672 3,303 Interest expense 2,323 1,456 733 109 124 104 Required: 1. Compute times interest earned for the three years' data shown for each company. 2. In the current year, and using times interest earned, which...
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following...
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea invested $14,600 cash in the business in exchange for common stock. 2. Andrea contributed $31,000 of photography equipment to the business in exchange for common stock. 3. The company paid $3200 cash for an insurance policy covering the next 24 months. 4. The company received $6800 cash for services provided during January. 5....
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following...
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Andrea invested $15,200 cash in the business. Andrea contributed $37,000 of photography equipment to the business. The company paid $3,800 cash for an insurance policy covering the next 24 months. The company received $7,400 cash for services provided during January. The company purchased $7,900 of office equipment on credit. The company provided $4,450 of services...
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following...
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Andrea invested $13,600 cash in the business. Andrea contributed $21,000 of photography equipment to the business. The company paid $2,200 cash for an insurance policy covering the next 24 months. The company received $5,800 cash for services provided during January. The company purchased $6,300 of office equipment on credit. The company provided $2,850 of services...
1. A drought in Nova Scotia reduces the apple harvest. What happens to consumer surplus in...
1. A drought in Nova Scotia reduces the apple harvest. What happens to consumer surplus in the market for apples? What happens to consumer surplus in the market for apple juice? Illustrate your answers with diagrams.
Upstate Growers (Upstate) is a cooperative corporation owned by 12 large apple farmers in New York...
Upstate Growers (Upstate) is a cooperative corporation owned by 12 large apple farmers in New York State. Upstate is responsible for managing all 12 apple orchards, picking and sorting the apples, and producing the final apple products. Apples are washed and sorted into three grades: “large unbruised apples,” “large bruised apples,” or “small apples.” These three apple grades/categories comprise the final products produced and sold by Upstate. Large unbruised apples are sold in supermarkets as whole “eating apples” after they...
Suppose the average Social Security benefits in the nation are $12,000 per year. The number of...
Suppose the average Social Security benefits in the nation are $12,000 per year. The number of social security pension recipients is currently 50 million. There are 150 million workers in the workforce this year and the average taxable wage per worker is $25,000 per year. Suppose the number of Social Security recipients increase to 100 million in 20 years, while the number of workers decreases to 100 million. Assuming nothing else changes, calculate the tax rate on wages necessary to...
McDonald intends to conduct a nation - wide measure the overall level of customer satisfaction. what...
McDonald intends to conduct a nation - wide measure the overall level of customer satisfaction. what is your recommendation?
Suppose you have been assigned to a new job in another nation, and that nation does...
Suppose you have been assigned to a new job in another nation, and that nation does not embrace a Biblical Worldview. What would you need to do to prepare yourself for that assignment in terms of maintaining your Biblical and ethical beliefs?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT