"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.

Comprehend the relationship between full income, taxation, and labor supply.

Analyze how income from various sources affects consumer choices and indifference between income sources.

Evaluate the effects of wage changes on labor-leisure choices and the backward-bending labor supply.

Understand the role of endowments and budget constraints in consumer choices.

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Definitions:

Style Manual

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Per Unit Tax

A tax applied on a product based on a fixed amount per unit sold, impacting the supply curve by shifting it upward or to the left.