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-. A news article from April 2015 reported that gasoline prices were expected to decline by32...

-. A news article from April 2015 reported that gasoline prices were expected to decline by32 percent during the summer of 2015 while “US drivers are expected to consume slightly more gasoline, a 1.6 percent increase, during the summer.” Calculate the price elasticity of demand for gasoline from this information. Is the demand for gasoline elastic or inelastic? Explain. [source: Damian J. Troise, “Summer Gas Prices Expected to Be 32 Percent Lower This Year,” Associated Press, April 7, 2015.]

-. In early 2012, Starbucks increased the prices for some of its tasty beverages in parts of northeastern and southern US states. Some people thought the price increase would hurt Starbucks, but most business analysts agreed that the price increase would not hurt decrease the coffee company’s revenues. What would have to be true for the analysts to be correct? Explain.

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