Price

(Dollars per box 15)

Quantity Demanded

(Millions of boxes 500)

Quantity Supplied

(Millions of boxes 0)

In this market, the equilibrium price is ____ per box, and the equilibrium quantity of oranges is____millionboxes.

For each of the prices listed in the following table, determine the quantity of oranges demanded, the quantity of oranges supplied, and the direction of pressure exerted on prices in the absence of any price controls.

PriceQuantity DemandedQuantity SuppliedPressure on Prices(Dollars per box)(Millions of boxes)(Millions of boxes)15 35

True or False: A price ceiling above $25 per box is not a binding price ceiling in this market.

True

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 long-run supply of oranges is much more price sensitive than the short-run supply of oranges.

Assuming that the long-run demand for oranges is the same as the short-run demand, you would expect a binding price ceiling to result in a that is in the long run than in the short run.

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