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Income and Starbucks Coffee Shops. Starbucks just hired you to determine whether your city could support...

Question:

Income and Starbucks Coffee Shops. Starbucks just hired you to determine whether your city could support a new Starbucks coff

Income and Starbucks Coffee Shops. Starbucks just hired you to determine whether your city could support a new Starbucks coffee shop. There are currently four Starbucks coffee shops in the city, and each has just enough customers to survive. The average household income in the city is expected to increase by 10 percent per year for the next 20 years. Suppose the income elasticity for Starbucks coffee products is 1.25 and the population is assumed to be constant. a. By what percentage will demand for Starbucks coffee products increase each year based on income growth? O A. 125% OB. 12.5% OC. 8.0%. OD. 1.25% b. How soon will the area have enough demand to support a fifth Starbucks? O A. 2 years. OB. 12 years. O C. 1 year OD. 8 years.

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The cross price elasticity of demand measwas the responsive of demand to the charges in the prices of the other goods, indica

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