1. Suppose that incomes have fallen on average, and that the state of Florida had an extremely favorable growing season for its orange crop. How would we expect that this will affect the supply curve and why? (The supply curve can remain static, the supply curve can shift to the left, we do not have enough information to say, or the supply curve will shift to the right)
2. What would we expect to happen to the demand curve and why?
3. What collective effect will these change(s) have on the equilibrium price and quantity?
1. The supply curve will shift to the right, because the favorable growing season will increase the supply of oranges.
2. The demand curve will shift to the left, because the decrease in incomes will reduce the demand for oranges.
3. The collective effect of these changes will be a decrease in the equilibrium price and an increase in the equilibrium quantity.