Suppose that a new study is released stating that consumption of orange juice (a substitute for apple juice) reduces the risk of cancer and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?

Question

Quizplus · Accepted Answer

The release of the new study stating that orange juice reduces the risk of cancer will increase the demand for orange juice as a substitute for apple juice. This would lead to a decrease in the demand for apple juice, causing the quantity of apple juice to fall. Meanwhile, the major freeze destroying half of the country's apple crop will decrease the supply of apple juice. As a result, the price of apple juice might rise or fall depending on the extent of the decrease in supply, while the quantity of apple juice will fall due to the decrease in demand and supply.

Suppose That a New Study Is Released Stating That Consumption