Consider the demand for apples. If the prices of a substitute good(bananas) increases and the price...

Consider the demand for apples. If the prices of a substitute good(bananas) increases and the price of a complement good (apple pie) increases, can you tell for sure what will happen to the demand for apples? Why or why not? Illustrate your answer with a graph.

Expert Solution

No, we cannot surely tell what will happen to the demand for apples.

Substitute goods or substitutes are at least two products that could be used for the same purpose by the same consumers. If the price of one of the products rises or falls, then demand for the substitute goods or substitute good (if there is just one other) is likely to increase or decline. When the price of bananas rises, the demand for bananas decrease and the demand for it's substitute apples Increase.

A complementary good is one used in conjunction with another good or service. Such a good may have little value without itscomplement. When the price of a particulargood rises the demand for its complementdrops because consumers are unlikely to use the complement alone. Similarly when the price of apple pie Increases, the demand for apples decreases.

Thus, when this happens we cannot surely tell of the demand will increase considering both the effects or decrease.

NOTE: I HOPE YOU WILL BE SATISFIED WITH MY ANSWER PLEASE DO PROVIDE RATING. THANK YOU AND HAVE A NICE DAY. :))

Rahul Sunny answered 9 months ago

A change in the price of a substitute good will affect the demand for any good....

A change in the price of a substitute good will affect the demand for any good. a. true . b. false The demand curve is related to choice. a. true b.false The positive slope of the supply curve can be explained by comparative advantage and opportunity cost. a. true b.false Across nations, per capita real GDP and the Social Progress Index exhibit a generally negative relationship. a. true b. false According to the textbook, policies that sacrifice human welfare in...

If the demand for good A increases when the price of good B increases, then goods...

If the demand for good A increases when the price of good B increases, then goods A and B are A. unrelated goods. B. complements. C. substitutes. D. There is not enough information to make a determination.

a. You have 2 goods, apples, and bananas, that you are buying. The price of apples...

a. You have 2 goods, apples, and bananas, that you are buying. The price of apples is $2.00 each and the price of bananas is $1.00 each. You have $10.00 to spend. Draw a budget line for these two products. Fill the table below to help you make this graph. b. Can you afford 4 apples and 4 bananas? Show why or why not. Apples Bananas Cost of Apples Cost of Bananas Total Cost 0 10 0 10 $ 10.00...

Suppose the price of blueberries increases and as a result, demand for apples falls. Based on...

Suppose the price of blueberries increases and as a result, demand for apples falls. Based on this information blueberries and apples are inferior goods substitutes normal goods complements Good X is unit elastic. Good Y is an elastic substitute. The own-price elasticity of good X is ---- and the cross-price elasticity of good Y is -----. -1, +3 -3, +1 +3, -1 +1, -3 Suppose demand is perfectly elastic. If the government imposes a tax on this good, then buyers...

David sells apples. The price of apples rise and the total revenue from selling apples increases....

David sells apples. The price of apples rise and the total revenue from selling apples increases. A. All of the other answers are incorrect B. It can be concluded that the demand for the product is elastic. C. It can be concluded that the supply of the product is elastic. D. It can be concluded that the demand for the product is inelastic. E. It can be concluded that the supply of the product is inelastic.

Explain how a demand curve shows how demand for bananas changes with price of bananas. (Minimum...

Explain how a demand curve shows how demand for bananas changes with price of bananas. (Minimum 50 words) b) Examine with respect to the demand for bananas, which of the following would cause (1) movement along the demand curve or (2) a shift of the demand curve? i).Consumers’ incomes drop. ii).The price of bananas rises. iii).The price of oranges, a substitute product, falls. c) Using supply demand analysis show what will be the change in equilibrium when there is a...

When the price of good x increases by 2 and the price of good y increases...

When the price of good x increases by 2 and the price of good y increases by 3, what happens to the slope of the budget constraint (does it get steeper/flatter/stay the same)? Please show your work.

Consider a Ricardian model where there are two goods: apples and bananas. For simplicity we will...

Consider a Ricardian model where there are two goods: apples and bananas. For simplicity we will only consider one country called Alba (that is we will not think about its trading partner (or potential trading partner)). In Alba the unit labour requirement for an apple is 20 hours and for a banana is 10 hours. Alba has an endowment of 1000 hours of labour. Draw a production possibility frontier (PPF) diagram for Alba. Apples must be on the vertical axis...

Consider an economy that produces only three types of fruit: apples, oranges & bananas. In the...

Consider an economy that produces only three types of fruit: apples, oranges & bananas. In the base year the production & price data are as follows: Fruit Quantity Price Apples 3000 Unit Rs. 2 per unit Bananas 6000 Unit Rs. 3 per unit Oranges 8000 Unit Rs. 4 per unit In the current year the production & price data are as follows: Fruit Quantity Price Apples 4000 Unit Rs. 3 per unit Bananas 14,000 Unit...

According to the law of demand, if price increases, quantity demanded of a good or service...

According to the law of demand, if price increases, quantity demanded of a good or service will decrease or vice versa. Price elasticity of demand tells us how much quantity demanded will decrease when price increases or how much quantity demanded will increase if price decreases.On the other hand, according to the law of supply, if the price increases, quantity supplied of a good or service will increase. Similarly, if price decreases, quantity supplied will decrease. The degree of sensitivity...

Question