Price Quantity Refer to the figure above. The graph in this figure illustrates a

Question

Price Quantity Refer to the figure above. 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? The equilibrium will first move from A to B, then return to A The equilibrium point will move from A to C. The equilibrium point will move from A to E The equilibrium point will move from A to B Click Save and Submit to save and submit. Click Save All Answers to save all answers. Type here to search

Explanation / Answer

1) ans is E

equilibrium will move from A to C and then C to E

2)social surplus=consumer surplus+producer surplus=1/2*20*15=150

Ans is C

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