Coffee and tea are substitutes.Good weather that sharply increases the coffee bean harvest would
A) increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea.
B) increase consumer surplus in the market for coffee and increase producer surplus in the market for tea.
C) decrease consumer surplus in the market for coffee and increase producer surplus in the market for tea.
D) decrease consumer surplus in the market for coffee and decrease producer surplus in the market for tea.

Question

Quizplus · Accepted Answer

Good weather increasing the coffee bean harvest would lead to a higher supply of coffee, reducing its price and increasing consumer surplus in the coffee market. As coffee becomes cheaper, demand for its substitute, tea, would decrease, leading to a decrease in producer surplus in the tea market.

Coffee and Tea Are Substitutes