"Because of the unseasonably cold weather, Florida orange growers expect (1) fewer bushels of oranges to be harvested, (2) a higher market price for oranges, and (3) larger total revenues from this year's crop." This statement would most likely be correct if the
A) demand for Florida oranges was elastic.
B) demand for Florida oranges was unitary elastic.
C) demand for Florida oranges was inelastic.
D) income elasticity of Florida oranges was negative.

Question

Quizplus · Accepted Answer

The statement suggests that the decrease in supply (due to fewer bushels harvested) will lead to a higher market price for oranges, which would only happen if the demand for Florida oranges was inelastic. If the demand were elastic, the increase in price due to the decrease in supply would lead to a significant decrease in demand, which would offset the increase in revenue from the higher price. A unitary elastic demand would also lead to a proportional decrease in demand that would offset the increase in revenue. There is no information provided about the income elasticity of Florida oranges, so option D cannot be the correct answer. Therefore, option C is the best choice.

"Because of the Unseasonably Cold Weather, Florida Orange Growers Expect