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If Starbucks' marketing department estimates the income elasticity of demand for its coffee to be 1.75 and cross price of elasticity of demand to be
If Starbucks' marketing department estimates the income elasticity of demand for its coffee to be 1.75 and cross price of elasticity of demand to be 3.0 with respect to the average price of tea, analyze how the following events will impact the quantity of coffee Starbucks expects to sell?.
a. The price of tea falls by 20 percent on average.
b. Consumer incomes fall by 4 percent on average.
c. Both the price of tea and consumer incomes rise by 8 percent.
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