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-(Figure: Supply and Demand in the Orange Juice Market)Use Figure: Supply and Demand in the Orange Juice Market.The market is in equilibrium at point C.Suppose most people drink orange juice only with champagne.What will be the new equilibrium point in the orange juice market if a law banning alcohol passes?
A)A
B)B
C)D

Question

Use the following to answer question: 
-(Figure: Supply and Demand in the Orange Juice Market)Use Figure: Supply and Demand in the Orange Juice Market.The market is in equilibrium at point C.Suppose most people drink orange juice only with champagne.What will be the new equilibrium point in the orange juice market if a law banning alcohol passes?
A)A 
B)B 
C)D

Quizplus · Accepted Answer

Since most people drink orange juice only with champagne, a law banning alcohol will decrease the demand for orange juice, shifting the demand curve to the left. This will cause a decrease in both equilibrium price and quantity. The new equilibrium point will be at D, where the new supply curve intersects the new demand curve.

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