The table below reports the market demand schedule of Coca Cola and Pepsi. Quantity demanded of...

The table below reports the market demand schedule of Coca Cola and Pepsi.

Quantity demanded of Coca Cola	Quantity demanded of Pepsi	Price of Coca Cola (MYR)
135	20	1
110	35	2
85	42	3
60	70	4
35	90	5
15	100	6

1. Calculate the elasticity of demand for Coca Cola when its price increases from MYR 4 to MYR 5. Is the demand elastic, inelastic or unit elastic at this price range? Briefly explain.

2. If the demand for Coca Cola is inelastic, what would happen to the total revenue if price increases? Briefly explain.

3. Find the cross price elasticity between Coca Cola and Pepsi when the price of Coca Cola increases from MYR 2 to MYR 3.

4. What can you say about these two goods? Are they substitute or complement? Briefly explain.

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Expert Solution

Rahul Sunny answered 1 year ago

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