PRICE (Dollars per gallon2Demand0015 30 45 60 75 90 105 120 135QUANTITY (Millions of gallons)demanded(Millions of gallons)(Mons of gallons)Surplus0(Millions of gallons)Shortage(Millions of gallons)9000The market price of orange juice without government intervention is $per gallon.Consider legislation that doesn't allow the price of orange juice to be below $9 per gallon and stipulates that the government buy any surplus orangejuice produced at that price. In order to raise the price to $9 per gallon, the government would need to buymillion gallons of orange juice,which would cost the government $million.Suppose there are only a few orange growers who would benefit from this legislation and millions of consumers who would suffer through higherprices. In this case, legislation imposing price supports at $9 per gallon would mean which of the following?The legislation will be easily defeated because the increased price of orange juice would hurt millions of consumers, who would not reelecttheir representatives.The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups.The legislation will probably pass because its benefits are concentrated while its costs are widespread.The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough abouteconomics. The following graph shows the market for orange juice.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 the grey field will change accordingly.PRICE (Dollars per gallon)12Graph Input Tool?Price2(Dollars per gallon)Supply10Quantity112Quantity supplieddemanded(Millions of gallons)2222(Millions of gallons)00Surplus0(Millions of gallons)Shortage(Millions of gallons)0090+Demand0015 30 45 60 75 90 105QUANTITY (Millions of gallons)120 135The market price of orange juice without government intervention is $per gallon.Consider legislation that doesn't allow the price of orange juice to be below $9 per gallon and stipulates that the government buy any surplus orangejuice produced at that price. In order to raise the price to $9 per gallon, the government would need to buymillion gallons of orange juice,which would cost the government $million.Suppose there are only a few orange growers who would benefit from this legislation and millions of consumers who would suffer through higherprices. In this case, legislation imposing price supports at $9 per gallon would mean which of the following?

The price at which an asset can be sold on the open market is known as the market price. The price…

The following graph shows the market for orange juice. 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 the grey field will change accordingly.

The following graph shows the market for orange juice. 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 the grey field will change accordingly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

PRICE (Dollars per gallon
2
Demand
0
0
15 30 45 60 75 90 105 120 135
QUANTITY (Millions of gallons)
demanded
(Millions of gallons)
(Mons of gallons)
Surplus
0
(Millions of gallons)
Shortage
(Millions of gallons)
90
00
The market price of orange juice without government intervention is $
per gallon.
Consider legislation that doesn't allow the price of orange juice to be below $9 per gallon and stipulates that the government buy any surplus orange
juice produced at that price. In order to raise the price to $9 per gallon, the government would need to buy
million gallons of orange juice,
which would cost the government $
million.
Suppose there are only a few orange growers who would benefit from this legislation and millions of consumers who would suffer through higher
prices. In this case, legislation imposing price supports at $9 per gallon would mean which of the following?
The legislation will be easily defeated because the increased price of orange juice would hurt millions of consumers, who would not reelect
their representatives.
The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups.
The legislation will probably pass because its benefits are concentrated while its costs are widespread.
The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough about
economics.

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