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Aneli
3 months ago
13

2. [5 pts] Consider the following events: Scientists reveal that eating oranges decreases the risk of diabetes, and at the same

time, farmers use a new fertilizer that makes orange trees produce more oranges. Illustrate and explain what effect these changes have on the equilibrium price and quantity of oranges.

Business
1 answer:
Scilla [3.8K]3 months ago
8 0

Response:

There will be an increase in equilibrium quantity, but the impact on equilibrium price remains uncertain.

Note:

Due to the scientists' discovery, demand for oranges will rise, as will the price.

Additionally, the introduction of new fertilizers will boost the supply of oranges, leading to a price decrease.

Taking both of these factors into account indicates that there will be a rise in equilibrium quantity, while the effect on equilibrium price cannot be determined.

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