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Answer
When the price of coffee goes up, people may look for alternatives that are similar, like tea. This means that if more people start buying tea because coffee is too expensive, it shows that coffee and tea can replace each other. This relationship is known as substitutes in economics. For example, if a cup of coffee costs $4 and suddenly rises to $5, some customers might decide to buy tea instead, which could be cheaper or more appealing at that moment. This change in demand for tea due to the price increase of coffee helps illustrate the concept of cross price elasticity of demand.
Detailed Explanation
When coffee gets more expensive, people look for other options. Other options are incorrect because Some might think that coffee and tea are not related.
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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