Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increase
B
Decrease
C
Stay the same
D
Cannot be determined
Understanding the Answer
Let's break down why this is correct
Answer
When the price of coffee increases, many people who enjoy coffee might look for a similar drink that costs less, which is where tea comes in. Since coffee and tea can be substitutes for each other, a rise in coffee prices usually leads to an increase in the demand for tea. For example, if a cup of coffee goes up from $3 to $4, some coffee drinkers might decide to buy tea instead because it is still affordable at around $2. This shift happens because people want to save money while still enjoying a warm beverage. Overall, as coffee becomes more expensive, more customers will likely turn to tea, boosting its demand.
Detailed Explanation
When coffee gets more expensive, people might buy more tea instead. Other options are incorrect because Some might think that if coffee costs more, people will buy less tea; It's a common mistake to think that demand stays the same.
Key Concepts
Substitutes
Price sensitivity
Topic
Cross-Price Elasticity of Demand
Difficulty
medium level question
Cognitive Level
understand
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