Papayas and Grapefruit Are Substitute Goods

question 127

Multiple Choice

Papayas and grapefruit are substitute goods. A drought in California destroyed a good portion of the grapefruit crop. Ceteris paribus,

• A) the price of both papayas and grapefruit will increase.
• B) the price of both papayas and grapefruit will fall.
• C) the price of grapefruit will increase, and the price of papayas will fall.
• D) the price of grapefruit will fall, and the price of papayas will increase.

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Definitions:

Reign

The period during which a sovereign rules over a monarchy, characterized by the policies and the historical context of their governance.

Marshall Plan

A U.S.-initiated program providing massive financial aid to Western Europe after World War II to rebuild economies and prevent the spread of communism.

Communism

A political and economic ideology that advocates for a classless society in which all property is publicly owned, and each person works and is paid according to their abilities and needs.

European Economic Community

An economic organization that aimed to bring about economic integration among its member states, a precursor to the European Union.