Consider the market for oranges in the US. Suppose we begin with an equilibrium in this market, where quantity produced is equal to quantity demanded, which is equal to 5 million tons of oranges. Further suppose the price of a pound of oranges is $2.50.

a. Illustrate this equilibrium by using supply and demand curves. Don't forget to label the axes, show the equilibrium quantity and the equilibrium price. (5 pts)

b. Now suppose a tropical storm hits Florida destroying 1 million tons of oranges in citrus farms. What happens to the supply curve? What happens to the equilibrium price? Do we have a shortage or a surplus of oranges in the wake of the tropical storm? Show by using your plot from part a. (5 pts)

c. How does the market for oranges transition to its new equilibrium? In the new equilibrium, is the price of oranges higher or lower than the initial equilibrium price, $2.50? Is the new quantity demanded higher or lower than 5 million tons? (5 pts)

d. Now suppose the same thing happens in Venezuela, where there is central planning. A tropical storm hits the citrus farms in Venezuela. Citrus farmers would like to adjust their prices following the storm but they have to wait until the next meeting of the Central Planning Committee, since the Central Planning Committee is the only one who can change the prices of oranges. Can the Venezuelan people enjoy as many oranges as they would like? Can the market for oranges in Venezuela transition to a new equilibrium on its own? (10 pts)