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 independent goods
D
They have no relationship
Understanding the Answer
Let's break down why this is correct
Answer
When the price of coffee goes up, people may decide to buy less coffee because it costs more. Instead, they might choose to buy more tea as an alternative. This shows that coffee and tea are substitutes, meaning that when the price of one goes up, the demand for the other increases. For example, if a cup of coffee rises from $3 to $4, some coffee drinkers might switch to tea, resulting in a higher demand for tea. This situation highlights the concept of cross-price elasticity of demand, where the change in the price of one good affects the demand for another good.
Detailed Explanation
When coffee gets more expensive, people look for other options. Other options are incorrect because Some might think that if people buy more tea, it means they buy it with coffee; This choice suggests that coffee and tea don't affect each other at all.
Key Concepts
Economic models
Topic
Cross-Price Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
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