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 decreased its price of grana mocha coffees from $7.50 to $5.50, the predicted quantity demanded of coffees would________ . A)decrease by 30.5 B)exactly double C)not change D)increase by 30.5

Question

Quizplus · Accepted Answer

To find the predicted quantity demanded at the new price of $5.50, we need to substitute P = 5.50 into the demand function: Q^d = 650 - (15.25 × P) Q^d = 650 - (15.25 × 5.50) Q^d = 650 - 83.375 Q^d = 566.625 Therefore, the predicted quantity demanded of grand mocha coffees would increase by 30.5 (566.625 - 536) if the price is decreased from $7.50 to $5.50.

Big City Java Is a Local Coffee Bar