Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They are substitutes
B
They are complements
C
They are unrelated goods
D
They are inferior goods
Understanding the Answer
Let's break down why this is correct
Answer
When the price of coffee goes up, some people might decide to buy more tea instead because they see it as a substitute for coffee. This means coffee and tea are related in a way that when the price of one changes, it affects the demand for the other. For example, if a cup of coffee costs $5 now instead of $3, a person who used to buy coffee might choose to buy tea instead, leading to an increase in tea sales. This relationship is measured by something called cross-price elasticity of demand, which shows how much the demand for one product changes when the price of another product changes. In this case, since the demand for tea rises when coffee's price increases, we can say that coffee and tea are substitutes.
Detailed Explanation
When coffee costs more, people look for alternatives. Other options are incorrect because Some might think coffee and tea go together, like peanut butter and jelly; It's easy to think they are unrelated, but they actually affect each other.
Key Concepts
Cross Price Elasticity of Demand
Substitutes and Complements
Consumer Behavior
Topic
Cross Price Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
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