A local coffee shop decides to raise the price of its medium latte from $4 to $5. After the price increase, they notice that the quantity of medium lattes sold decreases from 100 cups to 60 cups per day. Based on this scenario, how would you classify the demand for medium lattes in this coffee shop?

In this scenario, we can classify the demand for medium lattes as elastic. This means that when the price increased from $4 to $5, the quantity sold dropped significantly from 100 cups to 60 cups. The large change in quantity sold, despite a relatively small change in price, indicates that customers are sensitive to the price increase. For example, if a customer can easily find a similar latte at another shop for a lower price, they might choose to go there instead. Therefore, the coffee shop's decision to raise prices led to a noticeable decrease in sales, showing that demand is elastic.