Question

As the price of a good (coffee) falls, the demand for its substitute good (tea) will ______.

Options

• increase

• decrease

• remains unchanged

• none of these

Answer 1

As the price of a good (coffee) falls, the demand for its substitute good (tea) will decrease.

Explanation:

• Coffee and tea are substitute goods.
• When the price of coffee falls, people prefer to buy more coffee as it's now cheaper.
• As a result, the demand for tea (the substitute) will decrease.