Supply and demand is one of the foundations of economics. I am sure you have fac

Question

Supply and demand is one of the foundations of economics. I am sure you have faced an issue of supply and demand even just going to the grocery store. Use your economic terms to explain the following scenario. On a trip to the grocery store you want to purchase oranges, but the price is pretty high due to the canker disease that has affected the crops. What are your choices? Do you have alternatives? What causes a shift in the demand or supply of oranges (consider the determinants)? Lastly, are there other goods or complimentary items that might be affected by the shortage of oranges? Personal opinons please

Explanation / Answer

The choices here would be to either buy the oranges at the higher price, buy a substitute for the oranges at a lower price, or not buy any fruits at all. The answer to this question then would hinge on whether you think there are alternatives, which is also where personal opinions come in. Some people might say that an grapefruit could act as a substitute/alternative for the orange because both provide the same benefit - a source of vitamin C. In that case, the best choice would probably be to buy the grapefruits, which are cheaper than the oranges. Other people might say that there isn't a fitting substitute for oranges because they cannot get the same benefit (perhaps sweetness) from the grapefruit. In this situation, the choices narrow down to either buying the oranges at a higher price or not buy them at all. Personal situations such as financial status and personal taste (just how much do you value the orange in the first place) would come into play here.

The supply of oranges is changed because of the canker disease. The canker disease renders some oranges as unfit for eating and therefore decreases the supply. This could be attributed to a decrease in sellers or perhaps an increase in cost of production.

The shortage of oranges would have an impact on both substitutes for oranges and complimentary goods for oranges. An example of a substitute was given above. If many people consider grapefruits and oranges to be near substitutes, the shortage of oranges will result in an increase of demand for the grapefruits. Complimentary goods, on the other hand, would experience decreased demand due to the shortage of oranges. If lots of people eat oranges alongside grapes (random example, I know) the two would be considered complimentary goods. The shortage of oranges would not allow these consumers to have their regular orange-and-grape snack, so they wouldn't buy as many grapes since they can't have that snack anyway.

Hope thie helps!

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