Show how you get the percentage. Less than/more than and greater/fewer for the \

Question

Show how you get the percentage.

Less than/more than and greater/fewer for the '' click to select' option.

According to the table below, by how much would coffee sales decline if the price of coffee increased 50 percent? TABLE 4.1 Elasticity Estimates Price elasticities vary greatly. When the price of gasoline increases, consumers reduce their consumption only slightly: demand for gasoline is inelastic. When the price of fish increases, however, consumers cut back their consumption substantially: demand for fish is elastic. These differences reflect the availability of immediate substitutes, the prices of the goods, and the amount of time available for changing behavior. Instructions: Enter your answer as a whole number. %. If Starbucks raised its coffee prices by that much, what would happen to Starbucks' sales? How do you explain these responses? If Starbucks doubled its price, while all other firms kept their prices the same. Starbucks' sales would fall by (Click to select) the percentage change calculated above because there are (Click to select) substitutes for Starbucks coffee.

Explanation / Answer

Price Elasticity = % change in Sales / % change in price
-0.3 = % change in Sales / 100
% change in Sales = -0.3*100 = -30%

This would cause a fall by 30% due to FEW substitutes available.

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