Question

Consider the market for tea. Which of the following scenarios would definitely result in an increase in the price of tea?

a. A new study is published explaining the benefits of tea, and at the same time a new technology allowing for - more efficient tea farming is discovered. b. The price of coffee falls, and at the same time a new technology allowing for more efficient tea farming is discovered c. Consumers expect the price of tea to fall in the future, and at the same time a fire wipes out a significant portion of tea farms. d. The price of coffee falls, and at the same time the cost of labor to farm tea decreases. e. A new study is published explaining the benefits of tea, and at the same time a fire wipes out a significant portion of tea farms

Answer 1

Ans - e) A new study is published explaining the benefit of tea, and at the same time a fire wipes out a significant portion of tea farms.

Explanation:

When study is published about benefit of tea, this lead to increase in the demand for tea causes the demand curve to shift rightwards which increases the price and at the same time when fire wipes out a significant portion of tea farms this lead to decrease the supply and the supply curve shift leftward which again causes price to rise. So in this case is where price of tea will definitely increase.