Question
Exercise 2
If the coffee gets much more expensive:
a) What would be the effect on the sugar demand, assuming that sugar is clo
complement for coffee?
b) Would the sugar demand elasticity change?
c) Would the sugar supply elasticity change?
Exercise 3
MAR
3
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Answer
Exercise 2:
a) The demand for sugar would decrease as it is a complement for coffee.
b) Yes, the sugar demand elasticity would increase as the change in price of coffee would have a greater impact on the demand for sugar.
c) The sugar supply elasticity would not change as it is not directly affected by the change in price of coffee.
Exercise 3:
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