Tim Horton's has estimated the daily demand curve for their new Asiana blend of coffee, a high-end blend brewed exclusively from the tears of coffee bean farmers. The demand curve is Q 100 – 4P + 7.25Y+ 1.5 PM – 4PT, where Y is the average monthly income, PM is the price of McDonald's coffee, and PT is the price of a dozen Timbits. - Which of the following is FALSE? Timbits are a complementary good The income elasticity of demand decreases as P falls dQ/dPT = 4 If Q rises from 30 to 60 as P falls from 3.50 to 2.50, arc price elasticity = -2
