Assume the market for frozen orange juice is in equilibrium at a price of $2.00 per can and a quantity of 4200 cans per month. Assume that at a price $3.00 per can, quantity demanded falls to the 3000 cans per month and quantity supplied increases to the 4500 cans per month.
1. Illustrate the appropriate diagram for this market.
2. Determine the price elasticity of demand for frozen orange juice among the price of $2.00 and $3.00. Is the demand elastic or in elastic.
3. Determine the elasticity of supply for frozen orange juice among the prices of $2.00 and $3.00. Is the supply elastic or in elastic.
4. Discuss in general what factor would affect the elasticity of demand for frozen orange juice.
5. Discuss in general what factors would affect the elasticity of supply of frozen orange juice.