37. The price elasticity for rice is estimated to be –0.4 and the income elasticity is 0.8. At a price of $0.40 per pound and a per capita income of $20,000, the demand for rice is 50 million tons per year.
i) Is rice an inferior good, a necessity, or a luxury? Explain.
ii) If per capita income increases to $20,500, approximately what will be the quantity demanded rice?
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