Answer to Question #76771 in Microeconomics for beene
Consumer’s consumption of oranges depends on mainly – price of the orange, its nutritional value to the consumer and the degree to which the consumer needs to have orange. With an increase in income, the consumer's purchasing power increases, because he is in now in a position to buy more goods. The demand for goods also depends upon the income of consumers. Considering it’s important to consume orange for health reasons and price remaining same, an increase in consumer’s income will have positive effect on consumer’s consumption pattern. Thus, as consumption increases, the demand increases and the output of oranges also increases. Based on this increasing demand price may increase. If the market supply of oranges is not adequate, the price of the oranges also increases.
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