Suppose a freeze destroys part of the Florida orange crop.
a. Explain what happens to the price of oranges and the marginal product of orange pickers as a result of the freeze. Can you say what happens to the demand for orange pickers? Why or why not?
b. Suppose the price of oranges doubles and the marginal product falls by 30 percent. What happens to the equilibrium wage of orange pickers?
c. Suppose the price of oranges rises by 30 percent and the marginal product falls by 50 percent. What happens to the equilibrium wage of orange pickers?