Question

Suppose Congress passes legislation that offers subsidies to orange farmers. The impact on the market for orange juice will be a rightward shift of:

Answer 1

Answer:

the supply curve

Explanation:

Remember the supply curve shows the relationship between the amount of a commodity that a producer (or orange farmer) is willing to offer and at a particular price at any given time.

Because of the subsidies to orange farmers we expect the price of orange to become lesser in the future. Therefore the rightward shift occurs in supply curve for oranges due to favorable changes such as the new legislation which may lead to:

1. Reduction in tax,
2. Reduction in cost of factor of production,
3. Expectation of fall in price in future,