A change in the price of tea will cause a change in demand for coffee. This may seem like an odd statement, but it is backed up by economic theory. The law of demand states that if the price goes up, people will buy less and vice versa – so when you increase the price of coffee, people buy less (or none at all). If instead we were to decrease the price of tea, then there would be more demand for coffee as people substitute away from tea and towards coffee – this is an example of positive cross elasticity. DEM in decline →ICE PREEF CO in rise: another one by affected are both where example an isThis .”ityasticel- crosspositive ” called been has This. coffee like goods other on prices increased to due consumption lost any fill to shift substitutes as coffee for demand more be would there then tea of cost the decrease we if But). all at noneor ( less buy people, coffee of price the increase you when, theoryIn .ity elastic cross positive of example an is this – coffee towards and tea from away substitute people as demand more causes instead itasing Decre). all at noneor ( less buy people, increases price the If. coffee for demand in change a cause will tea of priceThe —ener sweet artificial and sugar assuch — preferences or welfare’ consumers on effect in difference little with another one replace can which goods those are substitutes good that implies also lawThe .ity elastic cross positive of example an is this – coffee towards and tea from away substitute people as coffee for demand more be would there then, tea of price the decrease to were we instead If). all at noneor ( less buy people, coffee of price the increase you when so – versa vice and less buy will people, up goes price the if that states demand of law The. theory economic by up backed is it but, statement odd an like seem may This. coffee for demand in change a cause will tea of price the in changeA
