5. 24.A large Coca-Cola vendor recently hired some economic analysts to assess the effect of a price increase in its 16-ounce bottles from $1.00 to $2.00. The analysts determined that, on average, the vendor's customers spend about $15.00 on soda (Coke and all other brands) each week, and the average price for other 16- ounce soda bottles is $1.00. The analysts also utilized some focus groups to determine the preferences of the vendor's customers. They used this analysis to build the following graph: Bottles of Budget line with price of $1.00 Other Soda Budget line with price of $2.00 Bottles of Coke Suppose Xo = 9 and X, = 7. Should the vendor expect to sell 7, more than 7, or less than 7 bottles of Coke after raising the price to $2.00 if Coke is a normal good?

5. 24.A large Coca-Cola vendor recently hired some economic analysts to assess the effect of a price increase in its 16-ounce bottles from $1.00 to $2.00. The analysts determined that, on average, the vendor's customers spend about $15.00 on soda (Coke and all other brands) each week, and the average price for other 16- ounce soda bottles is $1.00. The analysts also utilized some focus groups to determine the preferences of the vendor's customers. They used this analysis to build the following graph: Bottles of Budget line with price of $1.00 Other Soda Budget line with price of $2.00 Bottles of Coke Suppose Xo = 9 and X, = 7. Should the vendor expect to sell 7, more than 7, or less than 7 bottles of Coke after raising the price to $2.00 if Coke is a normal good?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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