Question
The price of Krispi Kreme donuts falls from $3 per donut to $2 per donut, and as a result, the quantity of Starbucks coffees demanded
The price of Krispi Kreme donuts falls from $3 per donut to $2 per donut, and as a result, the quantity of Starbucks coffees demanded falls from 8,000 per day to 4,000 per day. Calculate the cross price elasticity of demand coefficient. (You can use either the point formula or the midpoint formula.) Are these firms' products complementary or substitutes?
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Economics of Strategy
Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
6th edition
978-1118273630, 111827363X, 978-1118319185
