Food processing companies and commercial cooks recently had to decide whether to use pure vanilla or artificial vanilla. A cyclone in Madagascar, the number one producer of vanilla, destroyed most of the vanilla plants. (It takes three years to grow a plant.) Since artificial vanilla is acceptable to anyone who is not a connoisseur, most chose to use artificial vanilla which cost about one-fourth the price of pure. The demand for vanilla is mostly:

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The demand for vanilla is described as elastic because the significant increase in the price of pure vanilla (due to the cyclone in Madagascar) led many food processing companies and commercial cooks to switch to a cheaper alternative, artificial vanilla. Elastic demand indicates that the quantity demanded of a good or service changes significantly when its price changes.

Food Processing Companies and Commercial Cooks Recently Had to Decide