Question

suppose when the orize of starbucks coffe beans goes from $1 to $1.20 per pund, production...

suppose when the orize of starbucks coffe beans goes from $1 to $1.20 per pund, production increases from 90 million pounds if coffee beans to 160 million pound per year.

-using midpoint method , calcualate the % change in quanity/ supplied.
-explain results
-calcualte change in revenue
- how much is due to the price? how much is due yi quanity effects?

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Answer #1

The percentage change in quantity/price is 3 means the coffee beans is highly elastic good ;change in price will change the demand for goood drastically and here the quantity effect dominates the price effect of the good.

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