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Assume that the price elasticity of demand

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    Assume that the price elasticity of demand on coffee is -0.6.

    (a) How many percent would coffee quantity demanded decline if the price of coffee increased 30 percent?

    (b) If Starbucks raised its coffee prices by 30 percent and all other firm kept the same price, would the change in Starbucks’ sales be the same as your answer in (a)? How do you explain these responses?

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