Assume that the weather in Florida is exceptionally cold this year and has damaged the citrus crops, raising the costs for the companies that use a lot of oranges to produce orange juice. Indicate which of the following statements describing the resulting effects in the market for orange juice are true of false. #1. The demand for orange juice decreases. #2. The quantity of orange juice demanded decreases. #3. The supply of orange juice decreases. #4. The quantity of orange juice supplied decreases. When faced with a question like this, the first thing to determine is whether this problem deals with a change in supply or a change in demand. In this problem we are discussing the costs of production for orange juice producers. We don’t see any information mentioned about the consumers who purchase orange juice. This tells us two things: a change in the production costs leads to a shift in the supply curve , but the habits of consumers have not changed so there is no shift in the de...
Extra materials, tips, and resources for the economics courses that I teach.