Loading...
CFA Level 1
Economics

Understanding Price Elasticity of Demand in Coffee Sales

Hard Microeconomics Elasticity

A local coffee shop sells two types of coffee: regular and gourmet. The price elasticity of demand for regular coffee is estimated to be -0.5, while the price elasticity of demand for gourmet coffee is -1.5. If the coffee shop owner raises the price of regular coffee by 10%, what is the expected percentage change in the quantity demanded of regular coffee?

Additionally, if the owner raises the price of gourmet coffee by the same percentage (10%), what would be the expected percentage change in the quantity demanded of gourmet coffee? Assume other factors remain constant.

Hint

Submitted13.0K
Correct9.9K
% Correct76%