If the cross elasticity of demand between coffee and tea is positive, an increase in the price of tea will shift the demand curve for
A) tea leftward.
B) coffee leftward.
C) tea rightward.
D) coffee rightward.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand between coffee and tea indicates that they are substitute goods. Therefore, an increase in the price of tea will lead to an increase in demand for coffee, shifting the demand curve for coffee rightward.

If the Cross Elasticity of Demand Between Coffee and Tea