ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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decrease in the price of oranges
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an increase in the price of oranges
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increase in the cost of labor producing oranges
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None of the above
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Detailed explanation-1: -Answer and Explanation: When there is an increase in demand and a decrease in supply for oranges, it is obvious that the equilibrium price for oranges will increase. However, how the equilibrium quantity will change will depend on the magnitudes of increase in demand and decrease in supply.
Detailed explanation-2: -As per law of demand, when the price of a commodity rises the quantity demanded of the commodity decreases, i.e., implying an inverse relationship between demand and price. Thus, in case of oranges, a rise in price will lead to a fall in quantity demanded for oranges.
Detailed explanation-3: -A citrus disease, freezing temperatures and more supply chain problems mean growers can’t meet heightened demand for the state’s “liquid gold.” The next grocery item families could see skyrocketing in price: Florida orange juice.
Detailed explanation-4: -The supply of a good increases if the price of one of its substitutes in production falls. The supply a good decreases if the price of one of its substitutes in production rises.