California supplies the United States with 80% of its eating oranges. In late 1998, four days of freezing temperatures in the state's Central Valley substantially damaged the orange crop. In early 1999, Food Lion, with 1,208 grocery stores mostly in the Southeast, said its prices for fresh oranges would rise by 20% to 30%, which was less than the 100% increase it had to pay for the oranges. Explain why the price to consumers did not rise by the full amount of Food Lion's price increase. The price to consumers rose by 20% to 30% instead of the full 100% because A. the elasticity of supply was perfectly elastic. B. the demand curve was vertical. C. as prices increased, consumers demanded less output. D. the elasticity of demand was perfectly inelastic. E. consumers were not sensitive to prices.

C. as prices increased, consumers demanded less output.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

If demand is elastic, it means quantity demanded is more sensitive to changes in price.

If demand is inelastic, it means that quantity demanded is less sensitive to changes in price.

If demand is perfectly elastic, it means that consumers would demanding a product if price is increased. It is represented by a horizontal demand curve.

If demand is perfectly inelastic, it means that quantity demanded doesn't change regardless of changes in price. It is represented by a vertical demand curve.

The elasticity of supply measures the degree of responsiveness of quantity supplied to changes in price.

If supply is elastic, it means quantity supplied is more sensitive to changes in price.

If supply is inelastic, it means that quantity supplied is less sensitive to changes in price.

If supply is perfectly elastic, it means that producers would stop supplying a product if price is increased. It is represented by a horizontal supply curve.

If supply is perfectly inelastic, it means that quantity supplied doesn't change regardless of changes in price. It is represented by a vertical supply curve.

It is seen from the question that the burden of the damage to oranges is borne by the producers more than the consumers. This indicates that the elasticity of demand is more price elastic .

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