Suppose a Consumer Can Choose to Consume Either Apples or Oranges

question 204

Multiple Choice

Suppose a consumer can choose to consume either apples or oranges. Which of the following is likely to occur if the price of each fruit increases by 15 percent?

• A) The consumer will substitute apples for oranges.
• B) The income effect of the price change will be positive.
• C) The substitution effect of the price change will be zero.
• D) The consumer will demand more of both of the goods.
• E) The consumer will substitute oranges for apples.

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Definitions:

Professional Entry

The process or requirements for becoming recognized as a qualified practitioner in a professional field.

Market Penetration

A business growth strategy involving efforts to increase market share within an existing customer base or market segment, often by competitive pricing, advertising, or product improvements.

Abercrombie & Fitch

An American lifestyle retailer that focuses on casual wear for young consumers, known for its distinctive brand image and marketing strategies.

Market Segment

A distinct group of consumers within a broader market who share similar needs, preferences, or characteristics that a company targets with specific products or marketing strategies.