Suppose a frost destroys much of the Mpumalanga orange crops. 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. The shift in consumer tastes increases demand, also increasing price. The quantity effect is ambiguous because supply decreases while demand increases.

Suppose a Frost Destroys Much of the Mpumalanga Orange Crops