posted by Linda on .
Coca-Cola in dispensers located on a golf course sells for $1.25 a can, and golfers buy 1,000 cans. Assume the course raises the price to $1.26 (assume a penny raise is possible) and sales fall to 992 cans.
a. Using the midpoint formula, what is the price elasticity of demand for Coke
at these prices?
b. Assume the demand for Coke is a linear line. Would the elasticity of demand
be elastic or inelastic at 75 cents a can?
c. At $2.00 a can?