A period of bad weather hurt the orange groves in Florida, from where many of the oranges grown for juice come. 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.
C. Prices will rise because the orange market and the orange juice market are closely connected.
C. Prices will rise because the orange market and the orange juice market are closely connected.
To determine the most likely effect on the price of orange juice, we can analyze the given information. It states that a period of bad weather in Florida hurt the orange groves, resulting in a significant drop in the supply of oranges used for juice production. Based on this, we can consider the following scenario:
1. The supply of oranges for juice production decreases.
2. As a result, the availability of oranges for juice decreases, which could lead to a decrease in the production of orange juice.
3. If the demand for orange juice remains constant or increases, but the supply decreases, it creates a situation of scarcity.
4. When there is a scarcity of a particular good, it can often lead to an increase in price, as consumers are willing to pay more to obtain the limited product.
Considering this analysis, the most likely effect on the price of orange juice in this scenario would be:
C. Prices will rise because the orange market and the orange juice market are closely connected.
The decrease in the supply of oranges, due to the bad weather affecting the orange groves, would create a scarcity of oranges for juice production. This scarcity could result in a higher price for orange juice as demand remains steady or increases.