California Freeze Drives Up Citrus Prices

Lynne Kiesling

OK, all of you who are teaching principles of economics right now, I hope you are paying attention to this incredibly timely unanticipated freeze in the Central Valley in California. This is a great classroom example of a leftward shift of a supply curve due to an exogenous weather event, and the consequent increase in price, just like the model suggests would happen.

One thought on “California Freeze Drives Up Citrus Prices

  1. Unfortunatly the market will not be allowed to reach it’s natural equlibrim. When the orange crops freeze, the growers send the oranges to the juice factories, rather than for sale at the grocery store. Logically, this should drive down the price of orange juice.

    I think we’ll find the price of OJ changes very little though, as I suspect the government will buy up the excess in order to support the price.

    Let’s watch this one and see what happens.

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