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Consider the effects of change in the price of apples on different people, assuming that apples are a normal good.

Consider the effects of change in the price of apples on different people, assuming that apples are a normal good.


(a) How would an increase in the price of apples affect the consumption of apples for an office worker who regularly consumes apples but does not grow them? Refer in your answer to both the income and the substitution effects.


(b) How would an increase in the price of apples affect the consumption of apples for an apple farmer who regularly consumes apples?


(c) Give an example of a good, an increase in its price, and two different people who would be affected by a wage change in the way the office worker and the apple farmer are affected by apples and the change in their price.

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