Consider the market for raspberries in Australia. Which of the following would most likely lead to a decrease in demand for raspberries?Group of answer choicesA decrease in the price of gooseberries, a substitute for raspberries.An increase in the price of blueberries, a complement for raspberriesA decrease in income if raspberries are an inferior good.A severe frost that destroys most of the Tasmanian raspberry crop.Both a and b are correct.None of the statements in this list are correct.
Question
Consider the market for raspberries in Australia. Which of the following would most likely lead to a decrease in demand for raspberries?Group of answer choicesA decrease in the price of gooseberries, a substitute for raspberries.An increase in the price of blueberries, a complement for raspberriesA decrease in income if raspberries are an inferior good.A severe frost that destroys most of the Tasmanian raspberry crop.Both a and b are correct.None of the statements in this list are correct.
Solution
A decrease in demand for raspberries would most likely be caused by factors that make consumers less willing or able to buy raspberries at any given price.
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A decrease in the price of gooseberries, a substitute for raspberries, would make gooseberries more attractive relative to raspberries, leading some consumers to buy gooseberries instead of raspberries. This would decrease the demand for raspberries.
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An increase in the price of blueberries, a complement for raspberries, would make the combination of raspberries and blueberries more expensive, leading some consumers to buy less of both. This would decrease the demand for raspberries.
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A decrease in income would decrease the demand for raspberries if raspberries are a normal good (a good for which demand increases when income increases). However, if raspberries are an inferior good (a good for which demand decreases when income increases), a decrease in income would increase the demand for raspberries.
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A severe frost that destroys most of the Tasmanian raspberry crop would decrease the supply of raspberries, not the demand. This would lead to a higher price, but not a decrease in demand.
Therefore, the correct answer is "Both a and b are correct."
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