Question

If the price of coffee suddenly shoots up, the demand for tea is expected to ______.

• A. move rightward along the original demand curve
• B. increase
• C. remain unaffected
• D. decrease

Answer 1

Answer: (B)

increase

Substitute goods are goods which due to changed conditions, may replace each other in use (or consumption). Tea and coffee are such type of goods. So if price of coffee increases, quantity demanded for coffee will decrease. So the consumers using coffee will now shift themselves to tea unless the price decreases for coffee. So demand for tea is expected to increase now.