The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges,
A)lowers the equilibrium price but increases total consumer spending on juice.
B)decreases the equilibrium quantity and decreases total consumer spending on juice.
C)decreases both the equilibrium quantity and the price of juice.
D)raises the equilibrium price and increases total consumer spending on juice.
E)raises the equilibrium price but leaves total consumer spending on juice unchanged.

Question

Quizplus · Accepted Answer

A severe frost, which destroys large quantities of oranges, will reduce the supply of oranges, leading to a decrease in the equilibrium quantity of orange juice. As demand is price elastic, the decrease in quantity will lead to a decrease in the equilibrium price. The decrease in both quantity and price will result in a decrease in total consumer spending on orange juice.

The Demand for Orange Juice Is Price Elastic