Question

1. Imaginary scenarios: A recent study claims that eating oranges improves immunity and concentration. On the other hand in Florida, a recent storm affected the production of oranges. How the combination of these scenarios would affect the price and quantity in the orange market?

Answer 1

As it is given that A recent study claims that eating oranges improves immunity and concentration. Thus means that at eny price level consumers will consume more oranges and hence Demand of Oranges will shift to the left.

A storm will destroy some production of oranges and hence this will result in decrease in supply of oranges and hence Supply of Oranges will shift to the left.

This rightward shift of demand curve and leftward shift of supply curve will definitely result in increase in Price of Oranges. Thus Price of Oranges will definitely increase.

If decrease in supply of oranges is greater than increase in demand of oranges i.e. Leftward shift of supply curve is greater than rightward shift of demand curve then, Equilibrium quantity of oranges will decrease.

If decrease in supply of oranges is lesser than increase in demand of oranges i.e.Leftward shift of supply curve is lesser than rightward shift of demand curve, then Equilibrium quantity of oranges will increase.

If decrease in supply of oranges is equal to increase in demand of oranges i.e.Leftward shift of supply curve is equal to rightward shift of demand curve, then Quantity of oranges will remains same.