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Fact 3.5.1
The market for coffee is initially in equilibrium.Pepsi is a substitute for coffee; cream is a complement of coffee.Consider the for coffee.Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1.An increase in the price of Pepsi, a substitute for coffee will

Question

Quizplus · Accepted Answer

An increase in the price of Pepsi, a substitute for coffee, will lead to an increase in the demand for coffee as consumers switch from Pepsi to coffee. This increased demand will raise the price of coffee, which in turn will increase the quantity supplied of coffee.

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