Use the following diagram to answer the following questions.

-Refer to Diagram 4-2. Suppose equilibrium price and quantity exchanged are initially P₁ and Q₃, respectively. If the price of oranges, a substitute increases, then the new equilibrium price and quantity of peaches exchanged will be:

Question

Use the following diagram to answer the following questions.
 
-Refer to Diagram 4-2. Suppose equilibrium price and quantity exchanged are initially P₁ and Q₃, respectively. If the price of oranges, a substitute increases, then the new equilibrium price and quantity of peaches exchanged will be:

Quizplus · Accepted Answer

When the price of a substitute (oranges) increases, the demand for peaches will increase, leading to a higher equilibrium price and quantity for peaches. Thus, the new equilibrium will be at a higher price (P₂) and higher quantity (Q₄).

Use the Following Diagram to Answer the Following Questions