Homework Answers
Maurice's income elasticity of demand for gourmet coffee is e= 3. If Maurice gets a 3% cost of living adjustments, what happens to his demand for gourmet coffee?
The vertical intercept for the demand curve moves up by 9%, because
Maurice gets a 3% cost of living and income elasticity of demand
for gourmet coffee is 3, which indicates high income elasticity of
demand.
Diagram:-
Other options are not applicable to the present situation.
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