The price of coffee increases because of low crop yields.If the consumer's utility schedule for coffee remains constant,we can predict that coffee consumption
A) will increase.
B) will decrease.
C) will stay the same.
D) will increase if the marginal utility of coffee diminishes and will decrease if the marginal utility of coffee increases.
E) might change, but we need more information to determine if it increased, decreased, or did not change.

Question

Quizplus · Accepted Answer

As the price of coffee increases, consumers are likely to consume less coffee due to the increased cost. While their utility schedule for coffee may remain constant, the rise in price will lead them to substitute with other beverages or reduce their overall consumption. Therefore, coffee consumption will decrease.

The Price of Coffee Increases Because of Low Crop Yields