In March 2010, Mc Donald's Corp. announced a policy to increase summer sales by selling all soft
Question:
a. Given the change in price for a large soda from $1.39 to $1.00, how much would quantity demanded have to increase for McDonald's revenues to increase? (Use the arc elasticity formula for any percentage change calculations.)
b. What is the sign of the implied cross-price elasticity with drinks from McDonald's competitors?
c. What are the other benefits and costs to McDonald's of this discount drink policy?
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