If Starbucks raises its price by 7 percent and McDonald’s experiences a 0.3 percent increase in demand for its coffee, what is the cross-price elasticity of demand?

To calculate the cross-price elasticity of demand between Starbucks and McDonald's coffee, we need the percentage change in quantity demanded for McDonald's coffee and the percentage change in price for Starbucks coffee.

1. Find the percentage change in quantity demanded for McDonald's coffee:
The formula to calculate the percentage change is:
Percentage Change = ((New Value - Old Value) / Old Value) * 100

Assuming the old quantity demanded for McDonald's coffee is Q1, and the new quantity demanded is Q2, we can calculate the percentage change in quantity demanded as follows:
Percentage Change in Quantity Demanded = ((Q2 - Q1) / Q1) * 100

2. Find the percentage change in price for Starbucks coffee:
Assuming the old price of Starbucks coffee is P1, and the new price is P2, we can calculate the percentage change in price as follows:
Percentage Change in Price = ((P2 - P1) / P1) * 100

3. Finally, use the formula for cross-price elasticity of demand:
Cross-Price Elasticity of Demand = (Percentage Change in Quantity Demanded / Percentage Change in Price)

Plug in the calculated values for the percentage change in quantity demanded and the percentage change in price to find the cross-price elasticity of demand.