Question

The winds of the recent hurricanes in Florida are bringing significant financial gain to California orange growers. Due to the extensive damage to the Florida orange crop, many oranges were destroyed. The ones remaining were just as good as the previous oranges. California oranges are commanding their highest prices ever." If Florida and California oranges are substitute goods, which of the following statements best explains the economics of the quotation?a. the demand for Florida oranges has been reduced, causing their prices to fall and therefore increasing the demand for the substitute California orangesb. The supply of Florida oranges has decreased, causing the supply of California oranges to increase and their prices to risec. The demand for Florida oranges has been reduced by the hurricanes, causing a greater demand for the California oranges and an increase in their priced. The supply of Florida oranges has decreased, causing their price to increase and the demand for the California oranges to increase also

Answer 1

Answer:

The correct answer is option d.

Explanation:

Unfavorable weather in Florida has adversely affected the production of Florida oranges. The decline in production has led to reduced supply of Florida oranges. This decrease in supply will lead to an increase in the price.  

As Florida oranges and California oranges are substitutes, with the increase in the price of Florida oranges will lead to an increase in the demand for California oranges as people will prefer the cheaper substitute.