Fig. 1 shows the market for oranges after severe frost damages part of the crop. Demand has remained unchanged. DS1S2Quantity of orangesPrice© EAGLE BEACON ...
Question 1 Report
Fig. 1 shows the market for oranges after severe frost damages part of the crop. Demand has remained unchanged.
(a) Which supply curve, S1 or S2, is most likely to apply after the frost? [1]
(b) State the effect on equilibrium price. [1]
Answer Details
(a) S1 is the supply curve after the frost. [1]
Frost damages crops, reducing the number of oranges available for sale. A fall in supply is shown by a leftward shift, and S1 lies to the left of S2.
(b) Equilibrium price increases. [1]
Demand is unchanged, but fewer oranges are available. The reduced supply creates upward pressure on price, so the new equilibrium is at a higher price.
Download The App On Google Playstore
Everything you need to excel in your exams
