ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a good harvest of imported oranges.
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an increase in the supply of domestic oranges.
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a decrease in the cost of transporting imported oranges.
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an increase in households’ income, given that imported oranges are normal goods.
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Detailed explanation-1: -If the price of oranges goes up, we would expect an increase in demand for apples since consumers would move consumption away from the higher priced oranges towards apples which might be considered a substitute good. Complements, on the other hand, are goods that are consumed together, such as caramels and apples.
Detailed explanation-2: -An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
Detailed explanation-3: -Giffen Goods. As noted above, both Veblen and Giffen goods have an upward-sloping demand curve. This, means that demand for them increases when the price increases. Their main difference is in the type of good.
Detailed explanation-4: -An increase in demand will cause an increase in the equilibrium price and quantity of a good.