Active Learning 3: Shifts in supply and demand Use the three-step method to analyze the effects of each event on the equilibrium price and quantity of orange juice. Event A: A fall in the price of apple juice Event B: The price of oranges declines because of an abundant orange crop. Event C: Events A and B both occur simultaneously.

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EVENT A

If the price of substitute goods decreases, the Quantity demanded of the good increases and the demand for the substitute good decreas is

In this case if price of apple juice decreases, the demand for orange juice will decrease.

EVENT B: If the Price of Raw Material decrease, them quantity demanded increases.

In this case price of oranges declines, hence more oranges will be available at a lower cost, therefore demand of orange juice increases.

EVENT C: If the price of the substitute Goods decrease and the price of the raw materials decreases simultaneously, there will be no change in demand

In this case, price of apple juice decreases so demand for orange juice will decrease, but there is available oranges at lower price and that will increase demand for orange juice.