CA Foundation · Business Economics · Theory of Demand and Supply
Which of the following will cause a leftward shift of the demand curve for tea in India, other things remaining constant?
A rise in the price of sugar, a complement of tea, shifts the demand curve for tea leftward. Costlier sugar makes tea consumption more expensive overall, so less tea is demanded at each price, whereas the other options either move along the curve or shift it rightward.
- AA fall in the price of tea
- BA rise in the price of coffee, a substitute for tea
- CA rise in the price of sugar, a complement of teaCorrect
- DAn increase in consumers' incomes, tea being a normal good
Explanation
A rise in the price of a complement makes the combined consumption costlier, so demand for tea falls at every price and the curve shifts left. A fall in tea's own price only causes an extension of demand along the same curve. A rise in coffee's price or in income would increase demand for tea, shifting the curve right.
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