📚 Learning Guide
Utility Maximization After Price Change
easy

If the relationship between the price of apples and the quantity consumed is similar to the relationship between the price of oranges and the quantity consumed, then the price of apples increasing would relate to the change in consumption of oranges as: A:B :: C:?

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Choose the Best Answer

A

Increase in quantity of oranges consumed

B

Decrease in quantity of oranges consumed

C

No change in quantity of oranges consumed

D

Increase in utility from oranges

Understanding the Answer

Let's break down why this is correct

Answer

When the price of apples increases, people might buy fewer apples because they cost more. If the relationship between apples and oranges is similar, this means that as apples become more expensive and less appealing, people might choose to buy more oranges instead. This is because oranges can be a substitute for apples; if one is too pricey, people look for the other. So, if we think of the price of apples as A and the quantity consumed as B, we can say that the price of oranges is C, and the quantity consumed of oranges will increase as a reaction to the higher price of apples. Therefore, we can see that the change in consumption of oranges relates to the change in price of apples in a way that reflects how consumers adjust their choices based on price changes.

Detailed Explanation

When the price of apples goes up, people might buy fewer apples. Other options are incorrect because Some might think that higher apple prices mean more oranges are bought; This choice suggests that nothing changes with oranges.

Key Concepts

Utility Maximization
Price Elasticity of Demand
Consumer Choice Theory
Topic

Utility Maximization After Price Change

Difficulty

easy level question

Cognitive Level

understand

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