State the effect on the demand curve caused by the following situation and illustrate with the aid of a diagram in the space provided below. Label and indicate with arrows correctly. a) The demand for tea increases as a result of an increase in the price of coffee.

a) When the price of coffee increases, consumers will substitute coffee with tea, as they are substitute goods. This leads to an increase in the demand for tea, causing the entire demand curve for tea to shift to the right.

\begin{tikzpicture} % Axes \draw[->] (0,0) -- (0,5) node[left] {Price of Tea}; \draw[->] (0,0) -- (6,0) node[below] {Quantity of Tea}; % Initial Demand Curve (D1) \draw[blue, thick] (1,4) node[above left] {$D_1$} -- (5,1); % New Demand Curve (D2) \draw[red, thick] (2,4) node[above right] {$D_2$} -- (6,1); % Arrow indicating shift \draw[->, dashed, thick] (3,2.5) -- (4,2.5); \end{tikzpicture}

b) The effect on demand will be an increase.

$$\boxed{\text{Increase}}$$