Answer:
consumption of tea will <u>increase</u> , and marginal utility of coffee will <u>increase</u>
Explanation:
As Consumer consumes both tea & coffee, they are substitutes goods (which can be inter change-ably used by consumer).
Substitute Goods' price & quantity are inversely related. Such because -
- Price fall of a good makes it relatively cheaper & increases its quantity demanded, decreases other good's demand.
- Price fall of a good makes it relatively expensive & decreases its quantity demanded, increases other good's demand
So: Tea & Coffee being substitutes - If price of coffee rise, its own quantity demanded decreases & tea demand increases.
Coffee quantity demanded decrease means Marginal Utility of coffee will increase, as - MU decreases with more consumption quantity & it increases with less quantity consumption [as per Law of Diminishing Marginal Utility].
The first question is the four option I think
