Business, 06.04.2020 23:21 dndndndnxmnc

You run the only lemonade stand in Central Park, New York City. If people don't buy lemonade from you, their only other option is to buy orange juice from a nearby vendor. One day, you decide to raise the price of your lemonade from $1 per glass to $1.25 per glass. As a result, half of your usual customers decide to get orange juice instead of lemonade that day.

a. What does this experience tell you about the demand for lemonade in Central Park?
b. Calculate the price elasticity of demand for your lemonade.
c. Draw the demand curve and supply curve for lemonade in Central Park illustrating the equilibrium both before and after your price change.
d. Now what would happen to Price and Quantities if the cost of lemons went up? (The market is for lemonade.)

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You run the only lemonade stand in Central Park, New York City. If people don't buy lemonade from yo...