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 price and consumption of cafe lattes suggests that there was a shift in demand towards cafe lattes, possibly due to a change in consumer preferences or availability of alternative beverages. Since the price of cafe lattes increased and consumption also increased, it is unlikely that a change in the price of an input (such as coffee beans) caused this shift. Furthermore, the price of a substitute (such as tea) rising or falling would likely affect the demand for cafe lattes, but in opposite directions to the observed changes. Therefore, the most likely explanation is that the increase in consumption and price of cafe lattes was due to a shift in demand.

Suppose That in October the Price of a Cup of Cafe