Question

Cups of coffee of milk tea are substitutes. assume both have in elastic demand. Suppose exceptionally good weather increases the harvest of the coffee bean crop

Answer 1

Answer:

In that situation, the demand of the Milk tea will fall.

Explanation:

In businesses subtitles are the type of products that serve a similar purpose but generally less favorable. You use substitutes as a second product when you somehow cannot use the first/main product.

In the example above,

Let's say that Coffee is people's favorite beverages. They like it better than milk tea. But, if they don't have enough money to buy their favorite coffee, they sometimes have to exchange it and settle with milk tea.

When weather increases the harvest of the coffee bean crop, the price of coffee will most likely fall down due to the abundance in resource.

When this happen, there will be lesser people who use the substitute product. in the end, the demand for the milk tea will fall.