Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?
A) The supply of Florida oranges decreased, causing the supply of California oranges to increase, which resulted in a higher price.
B) The supply of Florida oranges decreased, causing the supply of California oranges to decrease, which resulted in a higher price.
C) The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase.
D) The demand for Florida oranges fell because of the freeze, and this led to a higher demand for California oranges.
Answer: C
You might also like to view...
Potential GDP is always greater than real GDP in an economy
Indicate whether the statement is true or false
You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants
Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run? A) If your success continues, you will be likely to establish a franchise and expand your market size. B) Your competitors are likely to change their menus to make their products more similar to yours. C) If you continue to maintain consistent quality, you will be able to earn profits indefinitely. D) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero.