Supply and Demand Assignment

Market: Orange Juice Concentrate

Source: http://www.dailymail.co.uk/news/article-5245043/Price-orange-juice-set-rise-following-Hurricane-Irma.html

Florida is the largest producer of oranges in the United States. When Hurricane Irma tore through the state, many of their orange crops were destroyed. As a result, the price of frozen orange concentrate rose to £1,600 per tonnea 25 per cent increase. The supply determinant associated with this increase in price is the cost of factors of production. This is because the destruction of orange crops caused the price of oranges to increase, leading to an increase in the cost of producing orange juice concentrate.

As show on the graph below, the destruction of orange crops caused the supply curve to shift to the left. This resulted in the equilibrium price of orange juice concentrate to increase and equilibrium quantity to decrease.

Graph

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s