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

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

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July 22, 2021
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True or false? As the price of oranges rises, the demand for oranges falls, ceteris paribus. Explain your answer.

Answer and ExplanationSolution by a verified expert

Explanation
Demand refers to the consumer's willingness and the ability to pay for the purchase of varying quantities of a particular good or service at varying prices during a particular period. Demand for the goods changes when any of the factors other than the own price of the good changes.

Quantity demanded of a good, on the other hand, is the actual amount of goods demanded by the consumers at a particular price. Quantity demanded changes only when the price of the good changes. The price of a good varies inversely with the quantity demanded of the good.

Therefore, as the price of good O has increased keeping all other factors constant, only the quantity demanded of the same will decline.

Verified Answer
The statement is false. A rise in the price would cause the quantity demanded to decline and not the demand.

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