The Power of Complementary Goods in Boosting Coffee Demand

How does the price of sweeteners affect the demand for coffee?

a. As the price of sweeteners decreases, the demand for coffee increases.
b. As the price of sweeteners decreases, the demand for coffee decreases.
c. As the price of sweeteners increases, the demand for coffee increases.
d. As the price of sweeteners increases, the demand for coffee decreases.
e. None of the above

Answer:

The correct answer is: a. As the price of sweeteners decreases, the demand for coffee increases.

When the price of sweeteners, complementary goods to coffee, decreases, the quantity demanded of coffee increases.

Explanation:

When the price of sweeteners, which are complementary goods to coffee, decreases, the quantity demanded of coffee increases. This is because sweeteners and coffee are complementary goods, meaning that they are often consumed together. When the price of sweeteners decreases, it becomes more affordable for consumers to purchase sweeteners to add to their coffee, which increases the demand for coffee.

For example, if the price of sugar, a sweetener, decreases, consumers may choose to buy more sugar to sweeten their coffee. This increase in the availability and affordability of sweeteners leads to an increase in the quantity demanded of coffee.

Therefore, the correct answer is option a. As the price of sweeteners decreases, the demand for coffee increases.