A recent increase in the price of coffee has led to a rise in the quantity demanded for tea. How would you classify the relationship between coffee and tea based on this scenario?

In this scenario, coffee and tea are considered substitute goods. This means that when the price of coffee goes up, people start looking for alternatives, like tea, and demand for tea increases. The concept of cross-price elasticity of demand helps us understand this relationship, as it measures how the quantity demanded of one good changes in response to the price change of another good. For example, if coffee prices rise and more people buy tea instead, it shows that they see tea as a replacement for coffee. Therefore, the increase in coffee prices leads to a higher demand for tea, highlighting how these two products are linked as substitutes.