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
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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