5. Cups of coffee and donuts are complements. Both have inelastic demand. A hurricane destroys half the coffee bean crop. Use appropriately labeled diagrams to answer the following questions. a. What happens to the price of coffee beans? b. What happens to the price of a cup of coffee? What happens to total expenditure on cups of coffee? c. What happens to the price of donuts? What  happens to total expenditure on donuts? 6. The price of coffee rose sharply last month, while the quantity sold remained the same. Five people suggest various explanations: Leonard:   Demand increased, but supply was perfectly inelastic. Sheldon:   Demand increased, but it was perfectly inelastic. Penny:   Demand increased, but supply  decreased at the same time. Howard:   Supply decreased, but demand was unit elastic. Raj:   Supply decreased, but demand was perfectly inelastic. Who could possibly be right? Use graphs to explain your answer

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
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5. Cups of coffee and donuts are complements. Both 
have inelastic demand. A hurricane destroys half the 
coffee bean crop. Use appropriately labeled diagrams 
to answer the following questions.
 a. What happens to the price of coffee beans?
 b. What happens to the price of a cup of coffee? What 
happens to total expenditure on cups of coffee?
 c. What happens to the price of donuts? What  
happens to total expenditure on donuts?
 6. The price of coffee rose sharply last month, while the 
quantity sold remained the same. Five people suggest 
various explanations:
 Leonard:   Demand increased, but supply was per
fectly inelastic.
 Sheldon:   Demand increased, but it was perfectly 
inelastic.
 Penny:   Demand increased, but supply  
decreased at the same time.
 Howard:   Supply decreased, but demand was unit 
elastic.
 Raj:   Supply decreased, but demand was per
fectly inelastic.
 Who could possibly be right? Use graphs to explain 
your answer

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