Suppose There Are Only Two Goods, Apples and Oranges

question 164

Multiple Choice

Suppose there are only two goods, apples and oranges. What happens if the price of each good increases by 15 percent?

• A) The consumer will substitute apples for oranges.
• B) The consumer will substitute oranges for apples.
• C) There is no substitution effect because relative prices have remained constant.
• D) Demand for both goods increases.
• E) Demand for both goods decreases.

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Definitions:

Flynn Effect

The observed substantial and long-sustained increase in both fluid and crystallized intelligence test scores measured in many parts of the world over the 20th century.

Identical Twins

Twins that result from one fertilized egg splitting and forming two embryos, sharing 100% of their genetic material.

Fraternal Twins

Siblings born at the same time but developed from separate eggs fertilized by different sperm, sharing 50% of their DNA.

Single Birth Siblings

Siblings who are not twins or multiples, born from separate pregnancies.