14. Price controls in the Florida orange market The following graph shows the annual market for Florida oranges, which are sold in units of gill-pound boxes. Use the graph input tool to help you answer the foliow'ing questions. You will hothe graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool 5:: T Market for Florida Oranges 45 + - |] Price 4|] (Dollars per iJ-Lxl lj n 5 | Quantity 500 Quantity Supplied i} 5 35 Ule ll Demanded {Mil-ions of boxes) E (Millions of boxes) 3 an E 25 + T3 I 3 2D I Demand 5 l E 15 _ 'l -!- 1D I I I _ I I I a 1 i I U 1 l l l l l I o 50 100 150 200 25:: 300 35-3: 400 45:: 500 QUANTITY (Millions of boxes) In this market, the equilibrium price is per box, and the equilibrium quantity of oranges is|:|million boxes. For each of the prices iisteor in the toilowing tahie, determine the quantity of oranges demanded, the quantity of oranges supplied, anor the direction of pressure exerted on prices in the absence of any price controls. Price Quantity Demanded Quantity Supplied (Dollars per box} (Millions of boxes) (Millions of boxes} Pressure on Prices 35 V I: j _ 15 I: j _. True or False: A price ceiling above $25 per box is not a binding price ceiling in this market. O True O False Because it takes many years before newly planted orange trees bear fruit, the supply curve in the short run is almost vertical. In the long run, farmers can decide whether to plant oranges on their land, to plant something else, or to sell their land altogether. Therefore, the longrun supply of oranges is much more price sensitive than the short-run supply of oranges. Assuming that the longrun demand for oranges is the same as the shortrun demand, you would expect a binding price ceiling to result in a V that is V in the long run than in the short run