Calculate the price and cross-price elasticities of demand for coconut oil. The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200 – 9.5p + 16.2p, + 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, p, 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 25¢ per pound, and Q is 1,143 thousand metric tons per year. The price elasticity of demand is . (Enter a numeric response using a real number rounded to three decimal places.)
Calculate the price and cross-price elasticities of demand for coconut oil. The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200 – 9.5p + 16.2p, + 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, p, 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 25¢ per pound, and Q is 1,143 thousand metric tons per year. The price elasticity of demand is . (Enter a numeric response using a real number rounded to three decimal places.)
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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Transcribed Image Text:Calculate the price and cross-price elasticities of demand for coconut oil. The coconut oil demand function (Buschena and Perloff, 1991) is
Q = 1,200 – 9.5p + 16.2p, + 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, p, 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 25¢ per pound, and Q is 1,143 thousand metric tons per year.
Inco
The price elasticity of demand is . (Enter a numeric response using a real number rounded to three decimal places.)
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