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 S1 (point A).If the price of oranges,a substitute for apples,decreases and the wages of apple workers increase,how will the equilibrium point change?
A)The equilibrium point will move from A to E.
B)The equilibrium point will move from A to B.
C)The equilibrium point will move from A to C.
D)The equilibrium will first move from A to B,then return to A.

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 S1 (point A).If the price of oranges,a substitute for apples,decreases and the wages of apple workers increase,how will the equilibrium point change?
A)The equilibrium point will move from A to E. 
B)The equilibrium point will move from A to B. 
C)The equilibrium point will move from A to C. 
D)The equilibrium will first move from A to B,then return to A.

Quizplus · Accepted Answer

The decrease in the price of oranges will decrease the demand for apples (shift D1 left), and the increase in wages will decrease the supply of apples (shift S1 left), moving the equilibrium from A to E.