"Because Apples and Oranges Are Substitutes, an Increase in the Price

question 109

Multiple Choice

"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?

• A)The statement will be true if consumer tastes for apples and oranges do not change.
• B)The statement is false because a change in the price of apples would not change the demand for apples.
• C)The statement is false because oranges are inferior goods; apples are normal goods.
• D)The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.

---

Definitions:

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

Partnership

is a legal form of business operation between two or more individuals who share management and profits.

Capital Accounts

Capital accounts track the equity or ownership interests of the shareholders or partners in a company, including their contributions and withdrawals.

Losses On Realization

Financial deficits incurred when assets are sold for a price lower than their book value during the liquidation of a business or in settling debts.