A frost wipes out much of Florida’s orange crop while consumer tastes shift towards orange juice. What happens to the equilibrium price and quantity of orange juice?
Correct answer E. Price will increase, quantity is ambiguous
Explanation
The frost reduces supply and the change in tastes raises demand. Both push price upwards, but they move quantity in opposite directions, so the net effect on quantity is ambiguous.
Answer checked How we write and check questions
Discussion