The manager of a convenience store competes in a monopolistically competitive market and buys cola from a supplier at a price of $1.25 per litre. The manager thinks that because there are several supermarkets nearby, the demand for cola sold at her store is slightly more elastic than the elasticity for the representative food store. Specifically, the elasticity of demand for cola sold by her store is . What price should the manager charge for a litre of cola to maximize profits? Suppose a new store opens nearby and the elasticity of demand increases to -4. What will be the impact on the price?