Is the demand for a Starbucks latte likely to be elastic or inelastic? Why? A. Inelastic because expenditure on coffee is constant B. Elastic because it has close substitutes C. Inelastic because it has close substitutes D. Elastic because it has no close substitutes

The correct answer is B. Elastic because it has close substitutes.<br /><br />The demand for a Starbucks latte is likely to be elastic because it has close substitutes. Elasticity refers to the responsiveness of the quantity demanded of a good or service to a change in its price. When a good or service has close substitutes, the demand is considered elastic because consumers can easily switch to the substitutes if the price of the original good or service increases. In the case of a Starbucks latte, there are many close substitutes available, such as coffee from other coffee shops or brands, tea, and other beverages. Therefore, if the price of a Starbucks latte increases, consumers can easily switch to one of the substitutes, making the demand for a Starbucks latte elastic.