{"id":50408,"date":"2024-04-15T23:09:53","date_gmt":"2024-04-15T23:09:53","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=50408"},"modified":"2024-04-15T23:09:53","modified_gmt":"2024-04-15T23:09:53","slug":"if-coffee-and-tea-are-substitutes-what-is-the-cross-price-elasticity-of-demand-for-coffee-with-respect-to-the-price-of-tea","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-coffee-and-tea-are-substitutes-what-is-the-cross-price-elasticity-of-demand-for-coffee-with-respect-to-the-price-of-tea\/","title":{"rendered":"If coffee and tea are substitutes, what is the cross-price elasticity of demand for coffee with respect to the price of tea?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;It is greater than 1&#8243; option2=&#8221;It is negative&#8221; option3=&#8221;It is a positive&#8221; option4=&#8221;They are both inferior goods&#8221; correct=&#8221;option2&#8243;]<!--more--><\/p>\n<p>The correct answer is B. It is negative.<\/p>\n<p>Substitute goods are goods that can be used in place of each other. For example, coffee and tea are substitutes. If the price of coffee increases, people will demand less coffee and more tea. This is because tea is a substitute for coffee. The cross-price elasticity of demand for coffee with respect to the price of tea is negative. This means that when the price of tea increases, the demand for coffee will decrease.<\/p>\n<p>Option A is incorrect because the cross-price elasticity of demand for coffee with respect to the price of tea is not greater than 1. Option C is incorrect because the cross-price elasticity of demand for coffee with respect to the price of tea is not positive. Option D is incorrect because coffee and tea are not both inferior goods.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;It is greater than 1&#8243; option2=&#8221;It is negative&#8221; option3=&#8221;It is a positive&#8221; option4=&#8221;They are both inferior goods&#8221; correct=&#8221;option2&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-50408","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>If coffee and tea are substitutes, what is the cross-price elasticity of demand for coffee with respect to the price of tea?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-coffee-and-tea-are-substitutes-what-is-the-cross-price-elasticity-of-demand-for-coffee-with-respect-to-the-price-of-tea\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If coffee and tea are substitutes, what is the cross-price elasticity of demand for coffee with respect to the price of tea?\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;It is greater than 1&#8243; 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