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Figure: Shifts in Demand and Supply
-(Figure: Shifts in Demand and Supply) Look at the figure Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel BEST describes how this will affect the market for oranges?
A)panel A
B)panel B
C)panel C
D)panel D

Question

Use the following to answer questions:
Figure: Shifts in Demand and Supply 
-(Figure: Shifts in Demand and Supply) Look at the figure Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel BEST describes how this will affect the market for oranges?
A)panel A 
B)panel B 
C)panel C 
D)panel D

Quizplus · Accepted Answer

The fall frost that destroys one-third of the nation's orange crop will decrease the supply of oranges, shifting the supply curve leftward from S1 to S2. This will cause the equilibrium price to increase from P1 to P2 and the equilibrium quantity to decrease from Q1 to Q2. Panel B shows the correct shift in supply and the resulting increase in price and decrease in quantity.

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