
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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2. Price controls in the Florida orange market Part 2
The following graph shows the annual market for Florida oranges, which are sold in units of 90-pound boxes.
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.

Transcribed Image Text:Graph Input Tool
Market for Florida Oranges
50
45
Supply
I Price
(Dollars per box)
20
40
Quantity
Demanded
(Millions of boxes)
Quantity Supplied
(Millions of boxes)
480
320
35
* 30
25
20
15
Demand
10
90 160 240 320 400 480 560 640 720 800
QUANTITY (Millions of boxes)
In this market, the equilibrium price is $
per box, and the equilibrium quantity of oranges is
million boxes.
For each of the prices listed in the following table, determine the quantity of oranges demanded, the quantity of oranges supplied, and the direction of
pressure exerted on prices in the absence of any price controls.
Price
Quantity Demanded Quantity Supplied
(Dollars per box) (Millions of boxes) (Millions of boxes) Pressure on Prices
30
20
True or False: A price ceiling above $25 per box is a binding price ceiling in this market.
True
False
Because it takes many years before newly planted orange trees bear fruit, the supply curve in the short run is almost vertical. In the long run, farmers
can decide whether to plant oranges on their land, to plant something else, or to sell their land altogether. Therefore, the long-run supply of oranges is
much more price sensitive than the short-run supply of oranges.
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
that is
in the long run than in the short run.
PRICE (Dollars per box)
Expert Solution

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Step 1
Equilibrium in the market occurs at the intersection point of market demand and market supply curve.
In this market, the equilibrium price is $25 per box, and the equilibrium quantity of oranges is 400 million boxes.
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