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 a 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 a 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

Moving to point C implies both an increase in the quantity of apples and a decrease in the price. A positive change in technology would increase supply, moving the equilibrium down (lower price, higher quantity), and a decrease in the price of oranges (a substitute) would decrease the demand for apples, also contributing to a lower price and potentially affecting quantity.

Figure 3.8 -Refer to Figure 3.8. the Graph in This Figure Illustrates