Suppose a consumer can choose to consume either apples or oranges. Which of the following is likely to occur if the price of each fruit increases by 15 percent?

Question

Quizplus · Accepted Answer

Since the price of both apples and oranges increases by the same percentage, the relative price between the two remains unchanged, leading to a zero substitution effect. The substitution effect occurs when consumers opt for a relatively cheaper alternative as the price of a good increases, but in this scenario, no good becomes cheaper relative to the other.

Suppose a Consumer Can Choose to Consume Either Apples or Oranges