After you have studied Economics in the News, answer the following questions.

a. Use the information in the news article to estimate the cross elasticity of demand for water with respect to the price of sugar-sweetened drinks.

b. How does the total revenue test work for a rise in price? What do you predict happened to total revenue from sugar-sweetened drinks when the tax was imposed on them? Why?

c. Would you expect the elasticity of demand for Coke, or Gatorade, or Red Bull, or Hawaiian Punch to be the same as the elasticity of demand for sugar-sweetened drinks? Explain why or why not.