Apples are a normal good, so if the price of an apple increases from 50¢ to 60¢, the quantity of apples demanded decreases because of

Question

Quizplus · Accepted Answer

The quantity of apples demanded decreases due to both the substitution and income effects. The substitution effect occurs because consumers may substitute apples with a cheaper alternative when the price of apples increases. The income effect happens because the increase in the price of apples effectively reduces consumers' purchasing power, making them feel poorer and thus reducing the quantity of apples they demand.

Apples Are a Normal Good, So If the Price of an Apple