Suppose a freeze wipes out 30% of the Florida orange crop. How will this effect the equilibrium price of Florida oranges and California oranges?

Let us analyze the impact of the freeze on equilibrium prices.

• The freeze in Florida will decrease the quantity produced by 30% and shift the supply curve to its left. It would lead to an increase in the equilibrium price of oranges.
• There will be no impact on California oranges because the quantity produced will not be impacted. The equilibrium price remains the same in the pre and post freeze scenario in Florida.