Answer to Question #182715 in Microeconomics for bun

Question

if the price of Apple increases and the price of Oranges decreases, how will it affect the budget line and consumer equilibrium?

do I have to make a graph in this and how will I show the increase and decrease in price of goods

Answer 1

Apple and oranges are two substitutes. An increase in price for one good will lead to an increase in demand and consumption of the other substitute good, thus an increase in the price of apples will make consumers buy more oranges and fewer Apples.

The budget line will tilt to increase the side of oranges and decrease the number of apples. Further, the consumer equilibrium will shift to a new equilibrium point where oranges are consumed more. There is no need for a graph as the explanation is right and understanding.