The Price Of Orange Juice May Be About To Skyrocket. Here's Why BY KALEA MARTIN/JAN. 18, 2022 2:04 PM EST If drinking orange juice is part of your daily morning routine, that might be about to change. According to a USDA report from early January shared by KTLA, Florida is currently experiencing a poor harvest season for its orange crops, causing production to drop by 16%. The cost of orange juice as a result is expected to go up by about 10% in as little as three to six months. As Bloomberg further elaborates, this is Florida's smallest orange crop since 1945. Groves are becoming increasingly infected by citrus greening disease, which affects the oranges by stunting their growth, causing them to fall from trees before they're ready for picking. This disease sometimes even leads to the entire plant dying. To keep up with the supply shortage, producers have no choice but to raise prices. The good news for consumers is that this only affects sales of orange juice but not oranges. Florida's oranges are the main source of juice distributed across the U.S., while California's crops are responsible for the fruit itself. Omicron is contributing to high orange juice prices While you'd expect the cost of products like hand sanitizer or face masks to increase in price and demand, Forbes reports that orange juice also "is one of the few demand side beneficiaries of virus outbreak periods." Whether it be from the coronavirus or from a common cold, people are advised to stay hydrated and drink vitamin C to stave off sickness, and orange juice therefore is a popular go-to. But, as Forbes explains, the demand for orange juice is now expected to increase more than it usually does during cold and flu season, along with its prices.4 5 96% + The reason for this is that the surge of the COVID's Omicron variant is happening at the same time as both the regular cold and flu season and a frost period in Florida that will last through late February. That combined with an already poor harvest is bad news for orange juice production. But unless you're willing to pay 10% more than average, there's unfortunately no way around it - you might just have to settle for grapefruit juice instead. https://www.tastingtable.com/737128/the-price-of-orange-juice-may-be-about-to-skyrocket- heres-why/?utm campaign=clip Please read the article attached and answer the questions: Question 1: Assume that market for orange juice is perfectly competitive. Based on the information from the article, explain why market equilibrium price for orange juice is "about to skyrocket". Support your answer with a demand and supply model. In your answer you need to include the equilibrating process and also discuss the impact on market equilibrium quantity for orange juice. [6 marks] Question 2: Based on the determinants of price elasticity of demand, discuss whether demand for oranges is elastic or inelastic for orange juice producers. [4 marks] Question 3: Assume orange juice are sold in a perfectly competitive market that is currently at equilibrium and orange juice producers are earning zero economic profit. Explain and illustrate graphically, how the change in market demand as discussed in Qs 1 will affect the firm in the short run. (Hint: You must show both the market and firm diagram). [6 marks]