When you drop by the only coffee shop in your neighborhood, you notice that the price of a cup of coffee has increased considerably since last week. You decide it's not a big deal, since coffee isn't a big part of your overall budget, and you buy a cup of coffee anyway. Most of the other coffee drinkers who frequent the coffee shop make a similar calculation.
a) The demand for coffee in your neighborhood is relatively _________________
b) Draw the demand curve to prove your answer as well as show the change in total revenue.
a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly elastic