If the cross elasticity of demand between coffee and tea is positive, an increase in the price of tea will shift the demand curve for
A) tea rightward.
B) tea leftward.
C) coffee rightward.
D) coffee leftward.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand indicates that coffee and tea are substitute goods. Therefore, an increase in the price of tea will lead to an increase in the demand for coffee, shifting the demand curve for coffee rightward.

If the Cross Elasticity of Demand Between Coffee and Tea