(Figure: Market for Tropicana Juices) Tropicana produces both orange juice and lemonade. What will happen to the supply of Tropicana orange juice when the price of lemonade rises in the market and the price of orange juice stays the same?
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According to an article in the Wall Street Journal, the demand for orange juice is declining in the United States "as newer entrants in the beverage aisle, including more- exotic fruit juices, such as pomegranate, energy drinks and ready to-drink coffee, have grabbed a greater share of the market." At the same time, orange juice production has been declining as bacterial infections reduce the quantity of fruit that orange trees can produce. The article notes that despite the decline in the demand for orange juice, the price of orange juice might increase. Use a demand and supply graph of the orange juice market to illustrate how the price of orange juice might increase as a result of these events. Be sure that all curves on your graphs are properly labeled, that you show any shifts in those curves, and that you indicate the initial and final equilibrium points.
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