An increase in the price of oranges would lead to which of the following effects in the market for oranges, assuming all other factors remain constant?

• A. An increase in the quantity supplied of oranges
• B. A decrease in the quantity demanded of oranges
• C. A decrease in the supply of oranges
• D. An increase in the demand for oranges

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the Law of Demand, which states that, ceteris paribus (all other factors held constant), an increase in the price of a good leads to a decrease in the quantity demanded of that good. This is because consumers tend to buy less of a good when its price rises.
2. Step 2: Recognize the difference between 'quantity demanded' and 'demand'. Quantity demanded refers to a movement along the demand curve caused by a change in price, while demand refers to a shift of the entire demand curve caused by factors other than price.
3. Step 3: Apply the Law of Supply, which states that an increase in the price of a good typically leads to an increase in the quantity supplied, as producers are willing to supply more at higher prices. However, this is about quantity supplied, not supply itself.
4. Step 4: Identify that a change in supply means the entire supply curve shifts due to factors like technology, input prices, or regulations, not due to a change in the good's own price.
5. Step 5: Conclude that an increase in the price of oranges will cause a decrease in the quantity demanded of oranges (movement along the demand curve), not a decrease in demand or supply, nor an increase in demand.