A consumer choosing between apples and oranges is at her best affordable point.Then the price of apples decreases.If both apples and oranges are normal goods,which one of the following statements is true about her new best affordable point?
A)She will consume more apples and more oranges.
B)She will consume more apples and fewer oranges.
C)She will consume fewer apples and more oranges.
D)She will consume fewer apples and fewer oranges.
E)She will consume more apples, and we cannot tell whether she will consume more or less oranges.

Question

Quizplus · Accepted Answer

When the price of apples decreases, the consumer can afford more apples, leading to an increase in apple consumption. The effect on orange consumption is uncertain because it depends on the relative strength of the substitution and income effects.

A Consumer Choosing Between Apples and Oranges Is at Her