Figure 3-8

-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B). Which of the following changes would cause the equilibrium to change to point C?
A)A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples.
B)An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples.
C)An increase in the number of apple producers and a decrease in the number of apple trees as a result of disease.
D)A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples.

Question

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B). Which of the following changes would cause the equilibrium to change to point C?
A)A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples. 
B)An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples. 
C)An increase in the number of apple producers and a decrease in the number of apple trees as a result of disease. 
D)A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples.

Quizplus · Accepted Answer

A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples, would cause the equilibrium to change to point C. This is because the increase in technology would shift the supply curve to the right, and the decrease in the price of oranges would shift the demand curve to the right. The new equilibrium would be at point C, where the new supply curve (S3) intersects the new demand curve (D3).

Figure 3-8 -Refer to Figure 3-8.The Graph in This Figure Illustrates an This