Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:
A)the price of tea will decrease.
B)the price of coffee will decrease.
C)the price of tea will increase
D)none of the above

Question

Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:
A)​the price of tea will decrease.
B)​the price of coffee will decrease.
C)​the price of tea will increase
D)​none of the above

Quizplus · Accepted Answer

Since coffee and tea are substitutes for each other, if the availability of coffee decreases, demand for tea will increase as consumers switch over to tea as a substitute. This will cause the price of tea to increase due to the increased demand.

Assume That Coffee and Tea Are Substitutes for Each Other