Solution : A change in price of coffee will directly influence the equilibrium price and quantity of tea as coffee is a substitute of tea. <br> An increase in price of coffee will make tea relatively cheaper and demand for tea will rise. It will lead to excess demand. <br> On the other hand, a decrease in price of coffee will decrease the demand tor tea as tea will become relatively costly. It will lead to excess supply. Show
How will an increase in the price of coffee affect the demand for tea? Explain with a diagram. Solution Increase in price of coffee will result in rise in demand for tea as they are substitute goods.When price of coffee is Rs 20, the demand for tea is shown by DD curve.When price of coffee increases to Rs 25, the demand for tea shows a rightward shift which is reflected by D1D1 curve.How does equilibrium price and quantity of tea will be affected when price of coffee will increase?In case price of coffee decreases, demand curve for tea would shift to the left. Consequently, new equilibrium would indicate a fall in equilibrium quantity as well as a fall in equilibrium price.
How will the price of tea affect the equilibrium price of coffee?A fall in price of tea will directly influence the equilibrium price and quantity of coffee. As a result the demand curve of tea will shift to the right. Price of tea will automatically increase the demand of tea but will decrease the demand of coffee. Therefore, there will be decrease in the demand of coffee.
How will an increase in the price of coffee affect the demand for tea use diagram?When price of coffee increases to Rs 25, the demand for tea shows a rightward shift which is reflected by D1D1 curve.
What would happen to the equilibrium price and quantity of coffee if the price of tea a substitute good fell?The correct answer is a. What would happen to the equilibrium price and quantity of coffee if the wages of coffee bean pickers fell and the price of tea fell? a. Price would fall, and the effect on quantity would be ambiguous.
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How does equilibrium price and quantity of tea will be affected when price of coffee will increase with help of diagram?
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