Tea and coffee are substitutes, and tea and sugar are complements. The price of tea rises, other things remaining the same.
A. The demand curve for coffee shifts to the right.
B. The demand curve for sugar shifts to the left.
C. The demand curve for tea shifts to the left.
D. The quantity of tea demanded falls along its demand curve.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A, B and D only
A change in the price of a related good shifts the demand curve of a good. A change in the good’s own price only moves along its demand curve.
A. The demand curve for coffee shifts to the right. — Correct. Tea is dearer, so people shift to its substitute. More coffee is demanded at every price of coffee.
B. The demand curve for sugar shifts to the left. — Correct. Less tea is bought, so less sugar, which is used with tea, is demanded at every price of sugar.
C. The demand curve for tea shifts to the left. — Incorrect. Only the price of tea itself has changed. Its demand curve does not shift.
D. The quantity of tea demanded falls along its demand curve. — Correct. A higher price of tea means a movement up along the same demand curve to a smaller quantity.
NCERT (2026-27): “2.4.4 Substitutes and Complements … Goods which are consumed together are called complementary goods. Examples of goods which are complement to each other include tea and sugar, shoes and socks, pen and ink, etc. Since tea and sugar are used together, an increase in the price of sugar is likely to decrease the demand for tea and a decrease in the price of sugar is likely to increase the demand for tea. Similar is the case with other complements. In general, the demand for a good moves in the opposite direction of the price of its complementary goods. In contrast to complements, goods like tea and coffee are not consumed together. In fact, they are substitutes for each other. Since tea is a substitute for coffee, if the price of coffee increases, the consumers can shift to tea, and hence, the consumption of tea is likely to go up. On the other hand, if the price of coffee decreases, the consumption of tea is likely to go down. The demand for a good usually moves in the direction of the price of its substitutes.” “2.4.6 Movements along the Demand Curve and Shifts in the Demand Curve … The demand function is a relation between the amount of the good and its price when other things remain unchanged. The demand curve is a graphical representation of the demand function. At higher prices, the demand is less, and at lower prices, the demand is more. Thus, any change in the price leads to movements along the demand curve. On the other hand, changes in any of the other things lead to a shift in the demand curve. …” |