The initial price of a cup of coffee is $1.5,and at that price, 200 cups are demanded. If the price falls to $0.90, the quantity demanded willincrease to 350 cups. a. Calculate the (arc) price...

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The initial price of a cup of coffee is $1.5, and at that price, 200 cups are demanded. If the price


falls to $0.90, the quantity demanded will increase to 350 cups.


a. Calculate the (arc) price elasticity of demand for coffee.


b. Based on your answer, is the demand for coffee elastic or inelastic?



Answered Same DayDec 23, 2021

Answer To: The initial price of a cup of coffee is $1.5,and at that price, 200 cups are demanded. If the price...

Robert answered on Dec 23 2021
113 Votes
a) Initial price = $1.5
Final price = $0.90
Initial quantity demanded = 200 cups
Final quantit
y demanded = 350 cups
Therefore change in price (ΔP) = (1.5 – 0.9) = 0.6
Change in quantity demanded (ΔQ) = (200 – 350) = – 150
Therefore arc price elasticity (ep) =


×

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