Positive cross-elasticity indicates substitute goods

Steps:

• Recall cross-price elasticity of demand measures how quantity demanded of one good changes with price of another; positive value means substitutes.
• Identify substitutes for tea as other beverages that can replace it when tea's price rises.
• Evaluate options: A and D are consumables paired with tea; C are utensils for tea; B are rival hot drinks.
• Select B as the only clear substitutes based on economic substitution patterns.

Why B is correct:

• Coffee and hot chocolate are substitute beverages to tea, so a price increase in tea raises their demand, yielding positive cross-elasticity per the definition of substitutes.

Why the others are wrong:

• A: Biscuits and cakes are complements to tea, leading to negative cross-elasticity.
• C: Cups and saucers are complementary utensils for tea, causing negative cross-elasticity.
• D: Sugar and milk are complementary additives to tea, resulting in negative cross-elasticity.

Final answer: B