If the price of coffee suddenly shoots up, Ceteris paribus, the demand for tea is expected to : (i)…
A rise in the price of coffee increases demand for tea because the two are substitutes. Decrease, no change and an unspecified range of outcomes are therefore incorrect…
Choose your answer
If the price of coffee suddenly shoots up, Ceteris paribus, the demand for tea is expected to :
(i) Decrease
(ii) Increase
(iii) Remain unaffected
(iv) Any of the above
Choose the combination containing only incorrect predictions :
Answer and explanation
Correct answer D
A rise in the price of coffee increases demand for tea because the two are substitutes. Decrease, no change and an unspecified range of outcomes are therefore incorrect predictions under the stated conditions. The combination containing those three predictions is (i), (iii) and (iv).
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Himachal Pradesh SET (HP SET)