📚 Learning Guide
Substitutes and Complements in Economics
easy

If the price of coffee increases, what is likely to happen to the demand for tea, assuming tea is a substitute for coffee?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Increase

B

Decrease

C

Stay the same

D

Become elastic

Understanding the Answer

Let's break down why this is correct

Answer

When the price of coffee increases, people may choose to buy less coffee because it costs more. Since tea is a substitute for coffee, this means that some of those coffee drinkers might start buying more tea instead. As a result, the demand for tea is likely to increase. For example, if a cup of coffee goes from $3 to $4, someone who usually drinks coffee might decide to buy tea instead, thinking it’s a better deal. This situation shows how the prices of substitute goods can affect each other in the market.

Detailed Explanation

When coffee gets more expensive, people look for cheaper options. Other options are incorrect because Some might think that if coffee is expensive, people will buy less tea; It's easy to think that demand stays the same.

Key Concepts

demand elasticity
Topic

Substitutes and Complements in Economics

Difficulty

easy level question

Cognitive Level

understand

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