What does the decrease in the price of coffee (other things being - ProProfs Discuss
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What does the decrease in the price of coffee (other things being equal) result in if coffee and tea are substitutes?
A. Downward movement along the demand curve for tea.
B. Downward movement along the demand curve for tea.
C. Upward movement along the demand curve for tea.
D. Rightward shift in the demand curve for tea.

This question is part of economics quiz 3 microeconomics

Asked by Merlin, Last updated: Oct 25, 2020

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4 Answers

John Adney

John Adney

John Adney
John Adney

Answered Jan 20, 2017

There is no correct answer to this question. If coffee and tea are substitutes and the price of coffee goes down, then the demand for tea will decrease, meaning a leftward shift in the demand curve for tea. When the price of substitutes change, there are shifts in demand of the good analyzed, not changes along the curve.
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jashon2117

jashon

jashon2117
Both A and B are the same, and shouldn't the decrease in the price of coffee (a substitute) cause a leftward shift in the demand for tea as its demand will decrease?
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Venuste

Venuste

Venuste
The decrease in price for coffee (a substitute for tea) will make consumers demand more coffee than tea. Remember that demand curve runs from the top left corner to the bottom right corner and quantity demanded is on thex-axis ( horizontal axis). Moreover, numbers increase as we move to the right-hand side of the x-axis. This means that if thedemand curve for coffee moves downwards along the demand curve, quantity demanded will be increasing and vice versa. Note that, the movement is happening along the demand curve, the curve itself is not swinging up or down.If the downward movement happens along the demand curve for tea, it means people are buying more tea than coffee because downward movement means increasing in quantity. This brings us to the conclusion that,C is the right answer to the question, not B.
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John Smith

John Smith

John Smith
John Smith

Answered Sep 11, 2016

Downward movement along the demand curve for tea.
With a decrease in the price of coffee people will want to buy more coffee; because coffee and tea are substitutes, they will buy less at possible prices for tea.
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