If Starbucks’s marketing department estimates the income elasticity of demand for its coffee to be 2.8, how will the prospect of an economic bust (expected to decrease consumers’ incomes by 5 percent over the next year) impact the quantity of coffee Starbucks expects to sell?

The percent change in quantity is -0.14%.

Step-by-step explanation:

The formula to compute the change in quantity is:

The income elasticity of demand is 2.80.

Percent change in price is -5% (since the prices decreases)

Compute the percent change in quantity demanded as follows:

Thus, the percent change in quantity is -0.14%.

use the power rule  

( a b ) n = a n b n

to distribute the exponent.

apply the product rule to  

3 x 2 y 3 . ( 3 x 2 ) 2 ( y 3 ) 2

apply the product rule to  

3 x 2 . 3 2 ( x 2 ) 2 ( y 3 ) 2

raise  

3

to the power of  

2 . 9 ( x 2 ) 2 ( y 3 ) 2 multiply the exponents in   ( x 2 ) 2

.

apply the power rule and multiply exponents,  

( a m ) n = a m n . 9 x 2 ⋅ 2 ( y 3 ) 2

multiply  

2   by   2 . 9 x 4 ( y 3 ) 2

multiply the exponents in  

( y 3 ) 2 .

apply the power rule and multiply exponents,  

( a m ) n = a m n . 9 x 4 y 3

⋅

2

multiply  

3   by   2 . 9 x 4 y 6

step-by-step explanation:

-2

7 - 9 = -2

reversed:

-2 + 9 = 7