Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost, and profitability

Refer to Figure 1A.1. Assume that the graph in this figure represents the demand and supply curves for orange juice. An increase in the price of apple juice, which is a substitute for orange juice, would be represented by a shift from

A) Demand 1 to Demand 2. B) Demand 2 to Demand 1. C) Supply 1 to Supply 2. D) Supply 2 to Supply 1.

Use the economic way of thinking to answer the following question: Does a diabetic need insulin?

A) No B) Yes, and therefore diabetics will always buy all what they need. C) Probably, but diabetics often find substitutes for insulin in the real world. D) Probably, but diabetics only care about the expected cost of insulin and ignore the expected benefits.