The table below shows the retail price and sales for instant coffee and roasted coffee for two
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a. Using these data alone, estimate the short-run price elasticity of demand for roasted coffee. Derive a linear demand curve for roasted coffee.
b. Now estimate the short-run price elasticity of demand for instant coffee. Derive a linear demand curve for instant coffee.
c. Which coffee has the higher short-run price elasticity of demand? Why do you think this is the case?
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Step by Step Answer:
a To find elasticity first estimate the slope of the demand curve Given the slope we can now estimate elasticity using the price and quantity data fro...View the full answer
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