Use the Information Below to Answer the Following Questions

question 90

Multiple Choice

Use the information below to answer the following questions.
Fact 3.5.1
The market for coffee is initially in equilibrium.Pepsi is a substitute for coffee;cream is a complement of coffee.Consider the market for coffee.Assume that all ceteris paribus assumptions continue to hold except for the event listed.
-Refer to Fact 3.5.1.An increase in the price of Pepsi,a substitute for coffee will

• A)increase the price and the quantity demanded of coffee.
• B)increase the price and the quantity supplied of coffee.
• C)decrease the price and the quantity demanded of coffee.
• D)decrease the price and the quantity supplied of coffee.
• E)increase the supply of coffee.

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Definitions:

Research and Development

Activities undertaken by companies or organizations to innovate and introduce new products or processes.

Revenue

The total amount of money generated from the sale of goods or services, before deducting any expenses.

Total Cost

The complete cost of production that includes both fixed and variable expenses incurred to produce a good or service.

Quantity

The quantity of a physical or intangible asset or service.