Consider changes in the supply of fresh orange juice. Give an example of a change in the price and quantity supplied that would demonstrate each of the following. A. Elasticity B. Inelasticity

Fresh orange juice is a product of blended oranges. Important to note, the supply of the juice is dependent on various factors such as seasons affecting the number of oranges produced. Subsequently, changes in the price of orange juice affect how much consumers will demand.

• Elastic demand is best illustrated with an example. If the price of juice drops from $1.20 to $1.00 or 16% and the quantity of juice demanded by consumers rises from 50 to 75 or 50% in response, demand is said to be elastic since the % change in quantity demanded exceeded the % change in price. Most of the products we buy every day have elastic demand.
• Inelastic demand is the opposite of elastic. If the quantity of juice demanded in our example had only risen by 5% in response to a 16% reduction in price, demand would be inelastic. An example of inelastic demand would be gasoline since consumers need gas to get to their jobs and buy necessities. Demand does not respond very much to price changes as people will buy just what they need despite higher or lower prices.