The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200-9.5p+16.2pp +0.2Y, where Q is the quantity of coconut oil demanded in thousands of metric tons per year, p is the price of coconut oil in cents per pound, pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 45¢ per pound, p, is 31¢ per pound, and Q is 1,322 thousand metric tons per year. Calculate the income elasticity of demand for coconut oil. The income elasticity of demand for coconut oil is (Enter a numeric response using a real number rounded to three decimal places.)
The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200-9.5p+16.2pp +0.2Y, where Q is the quantity of coconut oil demanded in thousands of metric tons per year, p is the price of coconut oil in cents per pound, pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 45¢ per pound, p, is 31¢ per pound, and Q is 1,322 thousand metric tons per year. Calculate the income elasticity of demand for coconut oil. The income elasticity of demand for coconut oil is (Enter a numeric response using a real number rounded to three decimal places.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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