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Apple juice and orange juice are substitutes in consumption and apple juice and apple sauce are substitutes in production. If the price of orange juice———————— or the price of apple sauce ————————————, then the price of apple juice will ——— —————————
- a)increases; increases; increase
- b)decreases; decreases; increase
- c)decreases; increases; decrease
- d)increases; decreases; increase
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Apple juice and orange juice are substitutes in consumption and apple ...
Explanation:
Substitutes in consumption:
Two goods are considered substitutes in consumption if they can be used in place of one another for satisfying the same want or need. Apple juice and orange juice are substitutes in consumption as both are fruit juices and can be consumed for satisfying the same need.
Substitutes in production:
Two goods are considered substitutes in production if they can be produced using the same resources. Apple juice and apple sauce are substitutes in production as both are made from apples and require similar resources for production.
Effect of price change in orange juice:
If the price of orange juice increases, consumers may switch to apple juice as a substitute, resulting in an increase in the demand for apple juice. This increase in demand may lead to an increase in the price of apple juice.
Effect of price change in apple sauce:
If the price of apple sauce increases, producers may switch to producing apple juice instead, resulting in a decrease in the supply of apple sauce and an increase in the supply of apple juice. This increase in supply may lead to a decrease in the price of apple juice.
Effect of price change in apple juice:
If the price of apple juice increases, consumers may switch to orange juice as a substitute, resulting in a decrease in the demand for apple juice. However, if the price of orange juice also increases, consumers may continue to buy apple juice, resulting in an increase in the demand for apple juice. Therefore, the effect of a price change in apple juice depends on the price change of its substitutes.
Answer:
Therefore, if the price of orange juice or the price of apple sauce increases, then the price of apple juice will increase as well. Hence, the correct answer is option 'A'.
Substitutes in consumption:
Two goods are considered substitutes in consumption if they can be used in place of one another for satisfying the same want or need. Apple juice and orange juice are substitutes in consumption as both are fruit juices and can be consumed for satisfying the same need.
Substitutes in production:
Two goods are considered substitutes in production if they can be produced using the same resources. Apple juice and apple sauce are substitutes in production as both are made from apples and require similar resources for production.
Effect of price change in orange juice:
If the price of orange juice increases, consumers may switch to apple juice as a substitute, resulting in an increase in the demand for apple juice. This increase in demand may lead to an increase in the price of apple juice.
Effect of price change in apple sauce:
If the price of apple sauce increases, producers may switch to producing apple juice instead, resulting in a decrease in the supply of apple sauce and an increase in the supply of apple juice. This increase in supply may lead to a decrease in the price of apple juice.
Effect of price change in apple juice:
If the price of apple juice increases, consumers may switch to orange juice as a substitute, resulting in a decrease in the demand for apple juice. However, if the price of orange juice also increases, consumers may continue to buy apple juice, resulting in an increase in the demand for apple juice. Therefore, the effect of a price change in apple juice depends on the price change of its substitutes.
Answer:
Therefore, if the price of orange juice or the price of apple sauce increases, then the price of apple juice will increase as well. Hence, the correct answer is option 'A'.
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Community Answer
Apple juice and orange juice are substitutes in consumption and apple ...
Trial and error with options
If the price of orange increases then relatively the suppy will increase
If the price of apple sauce increases the producer will be interested in producing apple sauce rather than producing apple juice so the supply for apple juice will decrease which will increase the price of the apple juice ( since inverse relationship between supply and price )
(Note direct relation between price and supply and inverse relation between supply and price )
Hence option A( increase ,increase,increase)
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Apple juice and orange juice are substitutes in consumption and apple juice and apple sauce are substitutes in production. If the price of orange juice———————— or the price of apple sauce ————————————, then the price of apple juice will ——— —————————a)increases; increases; increaseb)decreases; decreases; increasec)decreases; increases; decreased)increases; decreases; increaseCorrect answer is option 'A'. Can you explain this answer?
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Apple juice and orange juice are substitutes in consumption and apple juice and apple sauce are substitutes in production. If the price of orange juice———————— or the price of apple sauce ————————————, then the price of apple juice will ——— —————————a)increases; increases; increaseb)decreases; decreases; increasec)decreases; increases; decreased)increases; decreases; increaseCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Apple juice and orange juice are substitutes in consumption and apple juice and apple sauce are substitutes in production. If the price of orange juice———————— or the price of apple sauce ————————————, then the price of apple juice will ——— —————————a)increases; increases; increaseb)decreases; decreases; increasec)decreases; increases; decreased)increases; decreases; increaseCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Apple juice and orange juice are substitutes in consumption and apple juice and apple sauce are substitutes in production. If the price of orange juice———————— or the price of apple sauce ————————————, then the price of apple juice will ——— —————————a)increases; increases; increaseb)decreases; decreases; increasec)decreases; increases; decreased)increases; decreases; increaseCorrect answer is option 'A'. Can you explain this answer?.
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