Household in Southern India prefer to …

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Gaurav Seth 6 years, 11 months ago
Due to increase in the prices of apples and grapes, demand for oranges will increase. This will shift the demand curve rightwards fromD1D1 to D<font size="1"><font style="box-sizing: border-box;">2</font></font>D2. The outward parallel shift of demand curve will lead to excess demand. Consequently, there will be some buyers who may attempt to buy oranges at higher prices. This will keep pushing the equilibrium price to rise. Finally, the equilibrium price will settled to price OP2 that is higher than the initial equilibrium price OP1.

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