Which of the following represents the substitution effect of an increase in the price of apples?
A)A decrease in the consumer's real income
B)A decrease in the quantity of apples purchased
C)A decrease in the quantities of all goods purchased by the consumer
D)A shift of consumption from other goods to apples
E)A decrease in the opportunity cost of consuming apples

Question

Quizplus · Accepted Answer

The substitution effect occurs when consumers react to an increase in a good's price by consuming less of that good and more of other goods. In this case, as the price of apples increases, consumers are likely to buy fewer apples, substituting them with other goods, hence B is correct.

Which of the Following Represents the Substitution Effect of an Increase