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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 market 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 consumers to switch from Pepsi to coffee, increasing the demand for coffee. This increased demand will raise both the price and the quantity supplied of coffee in the market.

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