The image contains an educational activity focusing on price controls in the context of orange supply and demand. ### Table for Analyzing Orange Market Conditions**Instructions**: 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 (Dollars per box) | Quantity Demanded (Millions of boxes) | Quantity Supplied (Millions of boxes) | Pressure on Prices ||-------------------------|------------------------------------------|----------------------------------------|--------------------|| 35 | ___________ | ___________ | ⬇️ || 15 | ___________ | ___________ | ⬆️ |### True or False Question**Question**: A price ceiling below $25 per box is not a binding price ceiling in this market.- [ ] True- [ ] False### Explanation of Supply SensitivityBecause 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 supply that is ___________ in the long run than in the short run.---This exercise involves considering how price ceilings can impact market equilibrium, particularly in agricultural markets with long production cycles like oranges. Students are prompted to fill in values and make predictions based on economic principles. ### 2. Price Controls in the Florida Orange MarketThe following graph illustrates the annual market for Florida oranges, sold in units of 90-pound boxes.**Note:** Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to the graph.**Important:** Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will adjust accordingly.#### Graph Explanation- **Axes:** - The vertical axis represents "PRICE (Dollars per box)," ranging from 0 to 50. - The horizontal axis represents "QUANTITY (Millions of boxes)," ranging from 0 to 300.- **Lines:** - The **Supply** curve is depicted in orange, sloping upwards from the left. - The **Demand** curve is depicted in blue, sloping downwards from the left.- **Equilibrium:** - Indicated by the intersection of the supply and demand curves. Currently, the equilibrium point is not directly marked on the graph.#### Graph Input Tool- **Market for Florida Oranges:** - **Price (Dollars per box):** Adjustable value; initially set to 15. - **Quantity Demanded (Millions of boxes):** Initially set to 174. - **Quantity Supplied (Millions of boxes):** Initially set to 126.**Conclusion:** In this market, enter the equilibrium price and quantity:- The equilibrium price is $____ per box.- The equilibrium quantity of oranges is ____ million boxes.

A "price ceiling" is a kind of price control in which the government sets the maximum price that can be charged on goods. As it is a legal instrument of the government, anyone who charges above this limit can be penalized accordingly. This maximum price limit is generally set below the equilibrium price levels so that consumers’ interests can be protected.Equilibrium is the point of stability at which the demand and supply curves intersect each other. In the given graph, the demand and supply curves intersect when the quantity of Florida oranges is 150 million boxes. At the equilibrium quantity, the equilibrium price is $25. Hence, the equilibrium price is $25, and the equilibrium quantity is 150 million boxes.When the price is $35, the quantity demanded is 120 million boxes, and the quantity supplied is 180 million boxes. As the quantity supplied is greater than the quantity demanded, it puts downward pressure on prices. When the price is $15, the quantity demanded is 180 million boxes, and the quantity supplied is 120 million boxes. As the quantity demanded is greater than the quantity supplied, it puts an upward pressure on prices. The following values are missing from the given table: Price (Dollars per box) Quantity Demanded(Millions of boxes) Quantity Supplied(Millions of boxes) Pressure on Prices 35 120 180 Downwards 15 180 120 Upwards When the government imposes a price ceiling that is higher than the equilibrium price, the market equilibrium is not affected, as there is no binding. However, if the maximum limit on prices is below the equilibrium price, it will not only become binding in nature, but market equilibrium will not be retained. The economy will suffer from excess demand or shortages as the maximum price limit was put in place to protect the consumer’s interests. In this market, a price ceiling below $25 per box is legally binding. This is because the price ceiling is an upper limit on the price. For the price ceiling to work and be binding in the market, it must be less than the equilibrium price. As the equilibrium price is $25 per box, a price ceiling below $25 per box is a binding price ceiling in this market. And a price ceiling above $25 per box is not a binding price ceiling in this market. Thus, the given statement is true.Compared to the short-term supply of oranges, the long-term supply is far more price-sensitive. In the long run, a price ceiling would cause a proportionally larger drop in the quantity supplied of oranges, resulting in a larger shortage. Hence, a binding price ceiling will result in a shortage that is greater in the long run than in the short run.

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Economics

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 (Dollars per box) 35 15 O True Quantity Demanded (Millions of boxes) True or False: A price ceiling below $25 per box is not a binding price ceiling in this market. O False Quantity Supplied (Millions of boxes) Pressure on Prices 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 in the long run than in the short run. that is

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 (Dollars per box) 35 15 O True Quantity Demanded (Millions of boxes) True or False: A price ceiling below $25 per box is not a binding price ceiling in this market. O False Quantity Supplied (Millions of boxes) Pressure on Prices 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 in the long run than in the short run. that is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A6
he market equilibrium price for lettuce is $2 per pound. The market equilibrium quantity for lettuce is 30,000 pounds of lettuce. The government decideds to impose a price floor of $3 per pound of lettuce. After the price floor is imposed, the quantity of lettuce supplied will be _____ 30,000 pounds and the quantity of lettuce demanded will be ______ 30,000. The price floor causes a ____ in the market for lettuce. greater than less than surplus equal to shortage
macro question 2
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