Tea and coffee are substitutes, while tea and sugar are complements.…

Tea and coffee are substitutes, while tea and sugar are complements. The price of coffee falls and, at the same time, the price of sugar rises. Other things remaining the same, what happens to the consumer’s demand curve for tea?

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → It shifts leftward

Both changes lower the demand for tea at every price, so the demand curve for tea shifts leftward. Cheaper coffee draws consumers away from tea. Costlier sugar makes tea, which is used with sugar, less wanted.

Option (1) It shifts leftward — Correct. Both changes push in the same direction.

Option (2) There is a movement down along it — Incorrect. A movement along the curve needs a change in the price of tea itself, which has not changed.

Option (3) It does not change, as the two changes cancel out — Incorrect. The two changes do not cancel; both reduce the demand for tea.

Option (4) It shifts rightward — Incorrect. A rightward shift would need a rise in the price of coffee or a fall in the price of sugar.

NCERT (2026-27): “2.4.4 Substitutes and Complements … 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. … 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.”

“2.4.5 Shifts in the Demand Curve … Given the consumer’s income and her preferences, if the price of a related good changes, the demand for a good at each level of its price changes, and hence, there is a shift in the demand curve. If there is an increase in the price of a substitute good, the demand curve shifts rightward. On the other hand, if there is an increase in the price of a complementary good, the demand curve shifts leftward. …”