Kiwi fruit and strawberries are substitutes for consumers. An increase in the price of a kiwi fruit coupled with an increase in the number of strawberry growers ________ the equilibrium price of a kilogram of strawberries and ________ the equilibrium quantity of strawberries.

Question

Quizplus · Accepted Answer

An increase in the price of kiwi fruit (a substitute) increases the demand for strawberries, which tends to raise the price. However, an increase in the number of strawberry growers increases the supply, which tends to lower the price. The net effect on price is uncertain without more information, but the equilibrium quantity will increase due to higher demand and supply.

Kiwi Fruit and Strawberries Are Substitutes for Consumers