Final answer:
The substitution effect leads to a consumer choosing an alternative product, such as a different fruit, when the price of a good like apples increases, which is option B. This effect is a result of consumers seeking to maximize their utility while facing budget constraints. Alternatively, the income effect reflects a reduction in consumer purchasing power due to increased prices, potentially causing a reduction in the quantity demanded.
Step-by-step explanation:
The substitution effect describes how consumers respond to the increased cost of a product by seeking alternatives, effectively replacing the more expensive item with a less expensive substitute. In the case of an increased price for apples, the typical consumer response described by the substitution effect would be to switch to a different fruit (Answer B). This happens because consumers will look for products that can offer similar satisfaction at a lower cost, such as opting for pears, bananas, or another fruit altogether if the price of apples rises. This decision-making is influenced by the relative prices of goods and the desire to maximize utility within budget constraints.
On the other hand, the income effect occurs when a price change impacts the consumer's purchasing power. An increase in the price of a good like apples can reduce a consumer's effective income if they continue to purchase the same quantity, leaving less money to spend on other goods. Hence, a higher price for apples could lead to a consumer buying fewer apples or reducing consumption of other goods to adjust to the new budget constraints.