Attempts: 2. Price controls in the Florida orange market The following graph sho
ID: 1134432 • Letter: A
Question
Attempts: 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. Average: 14 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 field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Florida Oranges 50 45 40 35 Price (Dollars per box) Quantity Supplied (Millions of boxes) Supply 500 (Millions of boxes) 25 e 20 15 10 o 50 100 150 200 250 300 350 400 450 500 QUANTITY (Milions of boxes)Explanation / Answer
Demand curve for oranges and supply curve of oranges are intersecting each other corresponding to the price of $25 per box and the quantity of 250 million boxes.
So,
In this market, the equilibrium price is $25 per box, and the equilibrium quantity of oranges is 250 million boxes.
When the quantity demanded exceeds the quantity supplied, there is upward pressure on the prices.
When the quantity supplied exceeds the quantity demanded, there is downward pressure on the prices.
Following is the complete table -
A binding price ceiling is that price ceiling in which price fixed is below the equilibrium price.
In this market, equilibrium price is $25 per box.
So, a price ceiling above $25 per box is not a binding price ceiling in this market.
Thus, the given statement is True.
Assuming that the long-run demand for oranges is the same as the short-run demand, you would expect a binding price ceiling to result in a shortage that is larger in the long-run than in the short-run.
Price Quantity demanded Quantity supplied Pressure on prices 35 0 500 Downward 15 500 0 UpwardRelated Questions
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