In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit,
A) the supply curve shifted to the right resulting in an increase in the equilibrium price.
B) the supply curve shifted to the left resulting in an increase in the equilibrium price.
C) the demand curve shifted to the right resulting in an increase in the equilibrium price.
D) the demand curve shifted to the left resulting in a decrease in the equilibrium price.

Question

Quizplus · Accepted Answer

Hurricanes destroying a large portion of Florida's orange and grapefruit crops represent a negative supply shock because the quantity supplied of citrus fruit decreased. As a result, the supply curve shifts to the left, which leads to a higher equilibrium price for citrus fruit. Therefore, choice B is the best answer.

In 2004, Hurricanes Destroyed a Large Portion of Florida's Orange