As corporate wellness initiatives expand and employees return to hybrid office spaces, corporate spending on premium office perks has surged. Many firms are swapping traditional instant coffee stations for organic, nitrogen-infused cold-brew coffee keg subscriptions.
Market analysts note that demand for these premium beverage subscriptions is highly sensitive to changes in corporate discretionary budgets (acting as corporate income). With average corporate discretionary budgets increasing by 4.0% in 2024, the volume of premium cold-brew keg quarterly subscriptions in the commercial district is projected to rise from 250,000 units to 272,500 units.
Using the data in Extract A, explain the likely numerical value for the income elasticity of demand for premium organic cold-brew coffee keg subscriptions.
