Answer to Question #52345 in Microeconomics for lawrence
The coconut demand function is Q=1200-9.5p+16.2pp+0.2y . Assume that p is initially $ 0.45 per kg, pp =$ 0.31 per kg and Q=1275 thousand matric tons per year. Calculate income elasticity of demand for coconut oil?
Qd = 1200-9.5p+16.2pp+0.2y. If p is initially $ 0.45 per kg, pp =$ 0.31 per kg and Q=1275 thousand metric tons per year, then 1275 = 1200 - 4.275 + 5.022 + 0.2y, 0.2y = 74.253 y = 371.265 Income elasticity of demand for coconut oil is Qd'(y) = (1200 - 4.275 + 5.022 + 0.2y)' = 0.2.