Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The substitution effect, as apples become relatively cheaper than oranges
B
The income effect, since the consumer has more money to spend
C
The law of diminishing returns, as they seek to maximize output
D
The preference theory, which suggests they simply like apples more now
Understanding the Answer
Let's break down why this is correct
Answer
The behavior of buying more apples after the price of oranges increases can be explained by the principle of substitution. When the price of oranges goes up, they become more expensive compared to apples, making apples a more attractive option for consumers. This means that people will substitute oranges with apples to maximize their satisfaction or utility while spending their money wisely. For example, if oranges cost $2 each and apples are $1 each, a consumer might buy more apples instead of oranges since they can get more fruit for the same amount of money. This choice reflects how changes in price can influence consumer decisions and lead to a shift in what they buy.
Detailed Explanation
When oranges cost more, apples seem like a better deal. Other options are incorrect because This suggests the person has more money to spend; This idea is about getting less benefit from more of the same item.
Key Concepts
Utility Maximization
Substitution Effect
Income Effect
Topic
Utility Maximization After Price Change
Difficulty
medium level question
Cognitive Level
understand
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