ART || HOW MARKETS WORK Cups of coffee and donuts are complements. Both have inelastic demand. A hurricane destroys half the coffee bean crop. Use appropriately labeled diagrams to answer the following questions. a. What happens to the price of coffee beans? b. What happens to the price of a cup of coffee? What happens to total expenditure on cups of coffee? c. What happens to the price of donuts? What happens to total expenditure on donuts? Answer please ​

  • ekonomika

    Subject:

    Economy
  • Author:

    le
  • Created:

    1 year ago

Answers 1

Answer:

a . price of coffee increase coz it becomes the situation of excess demand to overcome this situation price would b increased

b . price of a cup of coffee also increase coz to overcome excess demand of coffee and expenditure will be the same as before on a cup of coffee but total expenditure decreases because of less production of coffee.

c . price of donuts also increase coz donuts are complementary goods of coffee and total expenditure on dounts also decreases coz stock of raw material of coffee decrease.

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