Question

Pam sees that the price of bananas has risen in the grocery store. All else equal, she decides to buy more tangerines than she normally purchases. From the information given, you might conclude that:

Answer 1

Answer:

It means that tangerines are a substitute good to bananas

Explanation:

Substitute goods are goods that provide the same benefit for the consumer, and therefore, are somewhat interchangeable. When the price of one good rises, then, people flock to the substitutes.

In this case, for Pam, tangerines provide the same benefit as bananas (they are both fruits anyway), and because bananas are now more expensive, she decides to purchase more bananas instead.