If the supply of oranges declines due to a cold winter, what effect can be expected on the price of oranges and orange juice?

When the supply of oranges declines due to adverse conditions, such as a cold winter, the immediate impact is a reduction in the availability of oranges in the market. This decrease in supply causes the price of oranges to rise because, with fewer oranges available, consumers are willing to pay more to secure the product.

As for orange juice, it is a derived product from oranges. When the supply of the raw material (oranges) decreases, the production of orange juice will also decline due to the limited availability of oranges for processing. Consequently, this reduction in the production capacity leads to a decrease in the supply of orange juice. Since there are fewer oranges available, manufacturers cannot produce as much juice, pushing the prices of orange juice higher as well.

Additionally, when consumers seek alternatives in response to higher prices for both oranges and orange juice, we often see an increase in demand for substitute products, such as grape juice. If consumers can no longer afford or find orange juice at previous price levels, they may turn to other beverages, amplifying the shift in demand dynamics within the market.

Thus, the correct answer captures the relationship between supply and price movements, highlighting the expected outcomes for both oranges and orange juice as the supply of the primary product decreases.