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 increased its price of grand mocha coffees from $6 to $8, the predicted quantity demanded of coffees would _________. A)increase B)decrease C)not change D)exactly double

Question

Quizplus · Accepted Answer

According to the demand equation Q^d = 650 - (15.25 × P), there is a negative relationship between price (P) and quantity demanded (Q), which means that as the price of the grand mocha coffees increases, the quantity demanded decreases. Therefore, if the price of the coffees is increased from $6 to $8, the predicted quantity demanded of coffees would decrease.

Big City Java Is a Local Coffee Bar