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· | NEWS WIRE PRICE, SALES, AND TOTAL REVENUE Starbucks Customers Shrug Off Price Hike Starbucks...

· | NEWS WIRE PRICE, SALES, AND TOTAL REVENUE Starbucks Customers Shrug Off Price Hike Starbucks announced new price hikes, eDegree of Elasticity Estimate Relatively elastic (E > 1) 2.4 Airline travel, long run Fresh fish New cars, short run 2.2 Unit

· | NEWS WIRE PRICE, SALES, AND TOTAL REVENUE Starbucks Customers Shrug Off Price Hike Starbucks announced new price hikes, effective June 24. The price of coffees and lattes will increase 5-20 cents per cup, depending on size, while the price of beans wll jump from $8.99 to $9.99 for a 12-ounce bag. Analysts think it's a good move for Starbucks. Past price hikes haven't made a dent in customer visits. The company says the average customer now spends $4.25 per visit. The new price hike will raise that spend to $4.30, or about 1 percent. CEO Howard Schultz expects revenue growth to accelerate in the coming year. Source: News accounts of June-July 2014 According to the News Wire, a. Starbucks raised average coffee prices by about b. if unit sales didn't decline at all, price elasticity would equal c. if unit sales fell by 0.2 percent, price elasticity would equal d. in the case presented in part c, demand would have been e. in the case presented in part c, total revenue would have
Degree of Elasticity Estimate Relatively elastic (E > 1) 2.4 Airline travel, long run Fresh fish New cars, short run 2.2 Unitary elastic (E1) 1.1 Private education Radios and televisions Shoes 0.9 Relatively inelastic (E < 1) Cigarette:s Coffee Gasoline, short run Long-distance telephone calls 0.4 0.3 0.2 a. By how much would coffee sales decline if the price of coffee increased 40 percent? If your local coffee shop raised its coffee prices by the same amount (40 percent), would sales decline by more, less, or the same amount as calculated in part a? More
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NW : al , N incre a s e in Pmce 4,0,05 from 44% n crease im 25 0 c〉 과 % change.ma . -0.2 P.39 tmerease a Tme elasticit ed--%

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