PRC-3 · Chapter 10 · Question 35 of 70
If the price of tea drops significantly, causing people to drink more tea, what will happen in the market for coffee (a substitute)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The demand for coffee will shift to the left
Explanation
Since tea and coffee are substitutes, cheaper tea will cause consumers to abandon coffee for tea, shifting the entire demand curve for coffee to the left.
More Demand, Supply and Market Equilibrium MCQs
- Q37If a government decides to impose a 'Price Floor' on wheat to guarantee farmers a high income, and sets this price significantly above the…
- Q38Cars and petrol are complementary goods. If the global price of petrol suddenly triples, what is the most immediate effect on the…
- Q39A strict new law forces landlords to cap apartment rentals at Rs. 10,000 per month (a Price Ceiling), while the natural equilibrium is Rs…
- Q40A farmer brings highly perishable fresh strawberries to the Sunday market. Since they will rot by Monday, he must sell all of them today…
- Q41What specific terminology defines the total amount of a commodity physically in existence in a warehouse, as opposed to the amount…