1. Many southern farmers face a choice between planting peanuts or cotton. In 20
ID: 1136635 • Letter: 1
Question
1. Many southern farmers face a choice between planting peanuts or cotton. In 2011, farmers anticipated higher prices for cotton. In the market for peanuts in 2011, there would be _______ in the supply of peanuts, which leads to _______ in the equilibrium price of peanuts and _________ in the equalibrium quantity of peanuts.
A. a decrease; an increase; a decrease B. an increase; a decrease; a decrease C. a decrease; an increase; an increase D. an increase; an increase; a decrease
2. In March, the quantity of orange juice sold in the town of Jackson was 3500 cartons and the price $3. In May, the quantity of orange juice sold in the town of Jackson was 3200 cartons and the price was $3.20. This change in the price and quantity sold could have been the result of
A. a reduction in the number of orange juice coupons provided by local markets.
B. the release of a medical study suggesting that consuming orange juice helps prevent cancer.
C. the after effects of a cold winter in Florida that killed half of the orange crop.
D. the after effects of a warm winter in Florida that increased the orange crop yield by 50 percent.
Explanation / Answer
Question 1
Farmers can choose to plant either peanuts or cotton.
Since, farmers anticipate higher price for cotton, they will be induced to plant more cotton and less peanut.
This will lead to the decreased production and thereby decrease in the supply of peanuts.
Given the demand for peanuts, this decrease in supply of peanuts will lead to the increase in the price of peanut and decrease in the quantity of peanuts.
Thus,
In the market for peanuts in 2011, there would be a decrease in the supply of peanuts, which lead to an increase in the equilibrium price of peanuts and a decrease in the equilibrium quantity of peanuts.
Hence, the correct answer is the option (A).
Question 2
Price of orange juice has decreased while the quantity of orange juice sold has declined.
A decrease in the quantity sold and an increase in the price take place when there is decrease in supply with demand remaining unchanged.
So, there must be a decrease in the supply of orange juice.
This can happen in case there is decrease in production of oranges.
Thus,
This change in the price and quantity sold could have been the result of the after effects of a cold winter in the Florida that killed half of the orange crop.
Hence, the correct answer is the option (C).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.