Question

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

Answer 1

Shortage

Step-by-step explanation:

If prices remain in a pre-hurricane level then the orange markek will face shortage.

First, because of the damages caused by the hurricane the orange supply will decrease. In the demand and supply graph, the supply curve will shift to the left. If the demand remains the same, the equilibrium price will increase and the equilibrium quantity will decrease. But if the price does not change, at the pre-hurricane price level the quantity supplied will be less than the quantity demanded. The figure attached shows the situation described above: p1 represents the pre-hurricane price and p2 would be the new equilibrium price.