Coca-Cola developed a vending machine that would sense the temperature and then
charge higher prices when it was hotter–a response to the increase in demand and the
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decrease in the elasticity of demand. Consumers found out about the new technology
and were outraged, causing Coca-Cola to shelve the idea.
2a) When does a firm have an opportunity to charge different prices to different
2b) What Determines Price Elasticity of Demand for Coca-Cola? Explain and
provide graph illustration.