ECO- Example of a Firm with Market Power

a. Using the data in the in-class handout "Example of a Firm with Market Power" (Classes #4 and #5), calculate the price elasticity of demand between the prices $22 and $21, showing your calculation and reasoning. Is demand elastic or inelastic (with a bit of explanation)?

b. Using data from the table on p. 409 in the text, find the price elasticity of demand for coffee. Translate that number into a sentence or two that might make sense for a colleague without economics training.