Calculate the price elasticity of demand?

Reference no: EM13174519

The initial price of a cup of coffee at a local gas station on is $1, and at that price, 400 cups are demanded each day. If the price falls to $0.90 a cup, the quantity demanded will increase to 500 cups a day.

a) Calculate the price elasticity of demand for coffee from this data.

b) Based on your answer, is the demand for coffee elastic or inelastic at this gas station?

Reference no: EM13174519

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