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Chapter 3: Problem 3

True or false? As the price of oranges rises, the demand for oranges falls, ceteris paribus. Explain your answer.

Short Answer

Expert verified
True. According to the Law of Demand in economics, as the price of a good or service (in this case, oranges) increases, the quantity demanded of that good or service decreases, ceteris paribus.

Step by step solution

01

Understand the Law of Demand

The Law of Demand in economics states that, ceteris paribus (assuming all else is held constant), when the price of a good or service rises, the quantity demanded of that good or service falls. This inverse relationship between price and demand is consistent unless other factors affect demand.
02

Apply the Law of Demand to the Price of Oranges

According to the Law of Demand, if the price of oranges increases, ceteris paribus, the demand for oranges should decrease. This is because consumers tend to buy less of a good or service when its price increases, provided other factors influencing demand are held constant.
03

Formulate Your Answer

Based on the Law of Demand and its application to this scenario, it would be true to say that as the price of oranges rises, the demand for oranges falls, ceteris paribus. This is assuming that all other factors that could influence the demand for oranges (like consumers' income, preferences, the price of other goods, etc.) are held constant.

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