A period of bad weather hurt the orange groves in Florida, from where many of the oranges grown for juice come. Supplies of oranges dropped greatly because of the bad weather. What is the most likely effect on the price of orange juice?

Question

(1 point)
Responses

Prices will drop because people will buy less orange juice.

Prices will drop because people will buy less orange juice.

Prices will stay the same because oranges and orange juice are not the same good.

Prices will stay the same because oranges and orange juice are not the same good.

Prices will rise because the orange market and the orange juice market are closely connected.

Prices will rise because the orange market and the orange juice market are closely connected.

It is impossible to tell whether prices will change.

It is impossible to tell whether prices will change.

Answer 1

The most likely effect on the price of orange juice is:

Prices will rise because the orange market and the orange juice market are closely connected.

This is because a significant drop in the supply of oranges due to bad weather typically leads to an increase in the cost of oranges, which in turn causes an increase in the price of orange juice, as it becomes more expensive for producers to obtain the main ingredient.