2. Price controls in the Florida orange market The following graph shows the ann

Question

2. Price controls in the Florida orange market 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 a white field, 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) 45 15 uanti Demanded (Millions of boxes) Supply 500 Quantity Supplied Milions of boxes) 35 30 25 20 15 10 .+ Demand 0 0 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of boxes)

Explanation / Answer

Answer:

Equilibrium Price: $25

Equilibrium Quantity: 250 million boxes

True, a price ceiling above equilibrium price of $25, will not be binding.

A binding price ceiling is when the maximum price is set below the equilibrium price level.

Price Quantity Demanded Quantity Supplied Pressure on Price 20 350 125 D>S = Price increases 30 125 350 S>D = Price decreases

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