Unformatted text preview: of $2 per donut is –0 . 875 and at a price of $1 per donut it’s –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 I’m 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...
View Full Document
- Fall '10
- Supply And Demand, $1, $2, donuts