Supply Curve Case Study

1.What does a supply curve illustrate? What would make the supply curve shift? Provide two examples from the market for orange juice where supply contracts (curve shifts left).

The supply curve illustrates the how much the sellers are willing to supply a good at different prices, as the price goes up the supply will increase and as the price goes down the supply will decrease. The supply curve shifts because of changes in costs or technology innovations, these changes can shift the supply curve in quantity supplied. The first scenario the orange growers have higher cost due to a hurricane, which wiped half of the orange supply produced for the year, that would make the price go up for the same quantity supplied of orange juice. Another scenario would be higher production cost due to the minimum wage increase set by the government, as suppliers will have to adjust their supply to meet the higher production cost and make a profit. On both of the scenarios the orange producers would have to make adjustments to their supply and produce less, driving the price up shifting the supply curve to the left.

2.Imagine that the market for oranges is in equilibrium at a …show more content…
One example of complement to skim milk would be Breakfast cereal as most people would buy milk and cereal for breakfast as they complement each other. Moreover, an example of substitute can be whole milk as people who want milk can chose between whole milk and skim milk as one could be cheaper than the other therefore people who buy skim milk have the whole milk as a substitute option for skim milk. If the price of whole milk suddenly rose more people would want to buy more skim milk, as the substitute option would not be as desirable. Furthermore, if the price of the cereal would rose people would not buy as much skim milk as we will expect a reduction on the use of skim