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Teaching Resources
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EconActive Solutions (CNN News Questions)
Chapter 4: Citrus Crop: sd3m02v1
- How will the big citrus crop affect the prices of oranges and grapefruits?
- What will probably happen to the price of orange juice and why?
- How will the change in the price of orange juice affect the demand for apple juice, a substitute for orange juice?
Answers:
- The big crop is an increase in the supply of grapefruits and oranges which will cause a decrease in price.
- Since oranges are the main input used in orange juice, a decrease in the cost of oranges should increase the supply of orange juice and lower its price as well.
- The demand for apple juice, a substitute, should decrease if the price of orange juice decreases. The decrease in demand for apple juice should cause the price of apple juice to decrease.
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