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Unformatted text preview: of $2 per donut is 0 . 875 and at a price of $1 per donut its 0 . 864. Since donuts are a gross complement to coffee, my consumption of coffee rises from 25 to 27 . 16 when the price of donuts falls from $2 to $1. Graphically, the demand curve for coffee shifts outward when the price of donuts falls (because Im demanding more coffee at a price of $2). The elasticity of demand for coffee with respect to the price of donuts equals 0 . 125 at a price of $2 per donut and it equals 0 . 115 at a price of $1 per donut. Page 74...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10