Asked by Dianna Juanes on May 12, 2024

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Coffee and tea are substitutes in consumption.If there is an increase in the price of coffee,assuming a positively sloped supply curve and a negatively sloped demand curve,total surplus in the tea market:

A) will increase.
B) will decrease.
C) will not change.
D) may change,but we cannot determine the change without more information.

Positively Sloped

Describes a line on a graph that moves upward as one moves from left to right, indicating a direct relationship between two variables.

Negatively Sloped

A term used in economics to describe a line on a graph that moves downwards from left to right, indicating an inverse relationship between two variables.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from trading a good or service.

  • Understand the concept of substitutes and complements in consumption and their impact on surplus.
  • Scrutinize the impact of variations in supply and demand on the entire surplus.
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HM
Henry MitchellMay 19, 2024
Final Answer :
A
Explanation :
Since coffee and tea are substitutes in consumption, an increase in the price of coffee will cause consumers to switch to tea, leading to an increase in the demand for tea. As a result, the equilibrium price and quantity of tea will increase. This increase in quantity and price will lead to an increase in total surplus in the tea market. Therefore, the correct answer is (A) "will increase."