If Consumers View Cappuccinos and Lattés as Substitutes,what Would Happen

question 44

Multiple Choice

If consumers view cappuccinos and lattés as substitutes,what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?

• A)Both the equilibrium price and quantity would increase.
• B)Both the equilibrium price and quantity would decrease.
• C)The equilibrium price would increase,and the equilibrium quantity would decrease.
• D)The equilibrium price would decrease,and the equilibrium quantity would increase.

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries, often used to protect domestic industries from foreign competition.

Government Revenues

The total money received by the government from taxes as well as non-tax sources like charges and fees.

Total Revenue

The total amount of money generated by the sale of goods or services before any expenses are subtracted.

Domestic Producers

Companies or individuals that produce goods and services within their home country.