Coffee has increased in price from $10 to $15 per pound. This change has lead to a decrease in the quantity of coffee demanded at a particular store from 75 to 50 pounds. Which of the following is true about the demand for coffee?
A)Demand for coffee is perfectly elastic
B)Demand for coffee has dropped to zero
C)Demand for coffee has reached equilibrium
D)Demand for coffee is inelastic

Question

Quizplus · Accepted Answer

In this scenario, the demand for coffee is inelastic.
Key Takeaway: A change in price-whether an increase or decreases-always affects how much money producers receive for their good and the quantity of the good that is demanded by consumers. How much the demand is affected ultimately depends upon how much the price of the good changes and how much that affects consumers. In general, if the demand for a particular good is price elastic, an increase in the good's price will lead to a decrease in revenue; if the demand for a particular good is price inelastic, then an increase in the good's price will lead to an increase in total revenue.

Coffee Has Increased in Price from $10 to $15 Per