Lime prices on the rise

One of the most dynamic and sought-after tropical fruits on the

market, limes have become a mainstay for consumers all over the globe. Scientists find that the juice and skin of limes are high in antioxidants which can protect the cell damage that free radicals cause, known as oxidative stress. Thus, its demand shows no signs of slowing.

However, supply is limited to a handful of locations, namely Mexico, Brazil, India, and China. In 2022, the lack of rain in the citrus-producing region in Brazil caused lower production of its limes. Extreme weather around the globe also affects the lime production in other production regions in a similar way.

Lime growers predict that less limes can be sold but the price will edge higher in the lime market in 2022.

1. Use a well-labeled supply-and-demand diagram to illustrate the effect of the above factors on the equilibrium price and quantity of the lime market. Briefly explain your answer.