Suppose that in October the price of a cup of cafe latte was $1.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 600 lattes were consumed. What might have caused this change?

Question

Quizplus · Accepted Answer

The increase in the price of cafe latte and the increase in consumption suggest that the demand for cafe lattes has increased. One possible reason for this could be a rise in the price of a substitute good, such as tea. As the price of tea rises, consumers may switch to cafe lattes as a substitute, leading to an increase in demand and consumption.

Suppose That in October the Price of a Cup of Cafe