The following graph shows the annual market for Florida oranges, which are sold
ID: 1137543 • Letter: T
Question
The following graph shows the annual market for Florida oranges, which are sold in units of 90-pound boxes Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph Note: Once you enter a value in a white fleld, the graph and any corresponding amounts in each grey field will change accordingly Graph Input Tool Market for Florida Oranges 50 Price Dolars per box) 20 360 Quantity Supplied 240 (Miions of boxes) (Miltions of boxes) 30 20 15 10 0 60 120 100 240 300 360 420 480 540 600 QUANTITY (Millions of boxes) million boxes In this market, the equilibrium price is S per box, and the equilibrium quantity of oranges isExplanation / Answer
In this market, the equilibrium price is $25 per box and the equilibrium quantity is 300 million of boxes . This occurs at the point where demand and supply curves intersect.
At the price of $30 , producers supply 360 million of boxes but consumers demand only 240 million of boxes . Therefore, there is a surplus of 120 million of boxes , and this exerts downward pressure on price until there is neither surplus nor shortage.
Similarly, at the price of $20 , consumers demand 360 million boxes but producers supply only 240 million of boxes. Therefore, there is a shortage of 120 million of boxes and this exerts upward pressure on price until there is neither shortage nor surplus.
TRUE because a price ceiling above $25 per box i.e above equilibrium price is not a binding price ceiling. Because binding price ceiling is the one that sets below the equilibrium price .
Assuming that the long-run demand for oranges is the same as the short run demand , we would expect a binding price ceiling to result in a shortage that is larger in the long run than in the short run. Because a binding price ceiling always creates a shortage , but the severity/ effect may differ between the short run and the long run. In the short run , farmers may have no choice but to continue producing orange. In the long run , if they cannot sell their oranges at equilibrium price , more and more farmers switch to other crops. Therefore, at the same price i.e price ceiling , fewer and fewer oranges will be produced.
Price (Dollars per box) Quantity demanded (Millions of boxes) Quantity supplied (Millions of boxes) Pressure on prices 30 240 360 Downward 20 360 240 UpwardRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.