Dear Ms./Mr.

I have a question, below, in economic field i hope you help me solving it

Thank you in advance.

Question# 3

A) Assume that the raw materials which your company uses in producing a product in Saudi Arabia are obtained from Ukraine. With the current Russia-Ukraine war, use appropriate demand and supply graph to show the effect of this war on market equilibrium price and quantity of this product in Saudi Arabia.

B) The initial price of a cup of coffee is $1, and at that price, 400 cups are demanded. If the price falls to $0.90, the quantity demanded will increase to 500.

i. Calculate the price elasticity of demand for coffee.

ii. Based on your answer, is the demand for coffee elastic or inelastic?

iii. Based on your answer to a., if the price of coffee is increased by 10%, what will happen to the revenues from coffee? Carefully explain how you know.