Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice, What would we expect to happen to the equilibrium price and quantity in the market for orange juice ?
Correct answer: E. price will increase, quantity is ambiguous.
- A. price will decrease, quantity is ambiguous
- B. The impact on both price and quantity is ambiguous.
- C. Price will increase, quantity will increase
- D. price will increase, quantity will decrease
- E. price will increase, quantity is ambiguous.
Explanation
The frost shifts supply left, while stronger tastes for orange juice shift demand right. Both changes raise price, but one reduces quantity and the other increases it, so the quantity effect is uncertain.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today ?
If demand increase in a market this will usually lead to ?
A reduction in the costs of production will ?
Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect ?
If the price of good is equal to the equilibrium price ?
If the price of a good is above the equilibrium price ?