Big City Java is a local coffee bar. Using Excel, the manager of Big City Java estimates the weekly demand function for their grand mocha coffees to be Q^d = 650 - (15.25 × P). The estimated regression equation suggests that if Big City Java decreased its price of grana mocha coffees from $7.50 to $6.50, the predicted quantity demanded of coffees would________. A)decrease by 15.25 B)increase by 15.25 C)not change D)exactly double

Question

Quizplus · Accepted Answer

Using the demand function, if the price of the grand mocha coffee decreases from $7.50 to $6.50, we can plug in the new price (P=$6.50) to find the new quantity demanded (Q): Q^d = 650 - (15.25 × P) Q^d = 650 - (15.25 × 6.5) Q^d = 550.75 Therefore, the predicted quantity demanded of coffees would increase by 15.25 (the coefficient of price in the demand function).

Big City Java Is a Local Coffee Bar