-Refer to the graphs above to answer this question.Suppose that the price of orange juice increases from P₁ to P₂ and the demand curve for apple juice shifts to the right from D₁ to D₂.What is the effect to total revenue from the sale of apple juice? A)Total revenue will not change since the cross-elasticity coefficient is not known. B)Total revenue will rise. C)Total revenue may rise or fall depending on the size of the price increase. D)Total revenue will fall. E)Total revenue will not change since there is no change in the price of apple juice.

Question

Quizplus · Accepted Answer

The rightward shift of the demand curve for apple juice, in response to the price increase of orange juice, indicates that apple juice and orange juice are substitutes. As demand for apple juice increases (due to the substitution effect), assuming price remains constant or increases due to higher demand, total revenue from the sale of apple juice will rise.

-Refer to the Graphs Above to Answer This Question