Assume that Starbucks decreases the price of its Grande Caramel Frappuccino

drinks by $50$ percent. Holding everything else constant, if the quantity demanded of

Grande Caramel Frappuccino drinks increases by $40$ percent.

A$)$ Would the demand for the drinks be relatively price elastic or relatively

inelastic? Briefly explain your answer.

B$)$ Would revenue from the sale of the drinks increase or decrease? Briefly explain

your answer.

Question $2.$ Draw and label a graph that depicts a downward$-$sloping demand curve and an

upward$-$sloping supply curve in the market for Starbucks$$s beverages.

A$)$ From the article: $$The company... said...beverage prices...it charges are needed

to help provide increased wages and training for baristas...$$

Refer to the graph you drew and explain how an increase in wages will affect

the supply curve for Starbucks$$s beverages. Would the change in the supply

curve cause a change in demand or a change in the quantity demanded for

Starbucks$$s beverages? Briefly explain your answer. Question $3.$ From the article: $$During his years leading Starbucks, $[$Howard$]$ Schultz said the

chain needed to be careful with promotions, lest they erode its brand. $$I don$$t think

we$$re going to go down the road of discounting Starbucks,$$ he said...$[$in$]2012...$

Holding everything else constant, if a decrease in price were to result in a decrease

in revenue from sales of Starbucks coffee, would this mean that demand for the

coffee is elastic or inelastic? Briefly explain your answer.

Question $4.$ From the article: $$Anthony Fumo... said he has noticed more offers on the

Starbucks app. $$At $50\%$ off, the coffee begins to feel more fairly priced,$...$

If a $50$ percent decrease in price increases sales of Starbucks coffee, should the

increase in sales be described as an increase in demand or an increase in quantity

demanded? Briefly explain your answer.

Question $5.$ Specifically, state if the market is best described as perfect competition, or monopolist competition, or oligopoly, or monopoly. Briefly explain your answer.