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Consider the following events: Scientists reveal that eating oranges decreases the risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees produce more oranges. Illustrate and explain what effect these changes have on the equilibrium price and quantity of oranges.
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examining the market forces of supply and demand. And we're taking a look at the market for oranges, and we're trying to analyze the effects of the supply and demand for oranges, given that it's recently been discovered that orange is reduced the risk of diabetes. And we know that farmers are using a new fertilizer, which can produce more oranges. So let's start by showing these changes on the supply and demand curves. So this first piece, the fact that oranges reduce the risk of diabetes if consumers are aware of that or are likely to see is our demand curve is going to shift outward right, because people are going to want more oranges if it means that they can improve their health by reducing their risk of diabetes. So our demand curve is going to shift outward. Now, our supply curve. We're gonna be taking a look at that for a second piece. The fact that farmers are using a new fertilizer which allows them to produce more oranges. That means that our supply is going to increase or supply curve is going to shift outward as well. We now have a new supply curve, which gives us a new equilibrium Sitting right in here so we can determine from this is that our quantity is definitely going to increase by some amount and our price. However, it could sit with this picture we just drew. It looks like it says right above our current price. So maybe price increases, but we can't really know for certain. We can't know by how much that supply curve is shifting. Because if we were to draw a new one, let's suppose our supply shifted by a lot. And now our supply curve sits all the way out here. Well, if that were to happen, we're going to see a new equilibrium sitting in here, in which case our price will have fallen down to P two and our quantity will still have increased. So given these shifts right here, we can know that our quantity is going to increase. However, we can't know for certain what's going to happen to our price
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