A period of bad weather hurt the orange groves in Florida, from where many of the oranges grown for juice come from. Supplies of oranges dropped greatly because of the bad weather. What is the most likely effect on the price of orange juice?
a) Prices will drop because people will buy less orange juice.
b) Prices will stay the same because oranges and orange juice are not the same good.
c) Prices will rise because the orange market and the orange juice market are closely connected.
d) It is impossible to tell whether prices will change.
Is it c?
Prices for digital music files drop greatly. How is the demand for digital music players likely to change?
a) Demand will rise, because the demand for digital music files will rise.
b) Demand will rise, because the demand for digital music files will fall.
c) Demand will fall, because supplies of digital music files will drop.
d) Demand will fall, because demand of digital music files will rise.
Is it a?
Yes, both of your answers are right.
Yes, you are correct!
For the first question, the most likely effect on the price of orange juice due to the drop in supplies of oranges is that prices will rise because the orange market and the orange juice market are closely connected. This means that when the supply of oranges drops, the supply of orange juice will also be affected, leading to an increase in prices.
For the second question, the correct answer is a) Demand will rise because the demand for digital music files will rise. When the prices for digital music files drop greatly, it is likely to increase the demand for those files. As a result, the demand for digital music players, which are used to play these files, is also likely to rise.
For the first question, the most likely effect on the price of orange juice would be c) Prices will rise because the orange market and the orange juice market are closely connected. When the bad weather affects the orange groves in Florida and reduces the supply of oranges, it directly affects the production of orange juice. As a result, the reduced supply of oranges for juicing leads to a decrease in the supply of orange juice, causing an increase in its price due to the reduced availability.
For the second question, the demand for digital music players is likely to change based on the fall in prices for digital music files. The correct answer is b) Demand will rise, because the demand for digital music files will fall. When the prices of digital music files drop greatly, it becomes more affordable and accessible to a larger number of consumers. This decrease in the price of digital music files increases the demand for them, which, in turn, stimulates the demand for the devices used to play those files, i.e., digital music players.