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?

Question

Quizplus · Accepted Answer

The frost reduces supply, increasing price, while the shift in consumer tastes increases demand, also increasing price. The quantity effect is ambiguous as it depends on the relative magnitudes of the shifts in supply and demand.

Suppose a Frost Destroys Much of the Florida Orange Crop