5. Income and substitution effects Juanita has a so-called fruit budget, which she uses to buy only apples and bananas. Assume the price of apples decreases. Which of the following is an example of the substitution effect? The decrease in the price of apples makes apples relatively less expensive than bananas, so Juanita will buy more apples and fewer bananas. Because the price of apples decreases, apples become less desirable to Juanita, who will therefore buy more bananas and fewer apples. The decrease in the price of apples increases Juanita's real income, which enables Juanita to buy more fruits in general