Coffee and tea are substitutes in consumption. If there is a DECREASE in the price of coffee, aming a po curve, total surplus in the teamarket Owill not change. Ob may change, but we cannot determine the change without more information Os will increase
Coffee and tea are substitutes in consumption. If there is a DECREASE in the price of coffee, aming a po curve, total surplus in the teamarket Owill not change. Ob may change, but we cannot determine the change without more information Os will increase
Chapter6: Elasticities
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:Coffee and tea are substitutes in consumption. If there is a DECREASE in the price of coffee, suming a positively sloped supply curve and a negatively sloped demand
curve, total surplus in the tea market
O will not change.
Ob may change, but we cannot determine the change without more information.
Os will increase
Od will decrease.
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