The coconut oil demand function (Bushena and Perloff, 1991) is Qequals1 comma 200minus9.5pplus16.2p Subscript pplus0.2Y, where Q
Question:
The coconut oil demand function (Bushena and Perloff, 1991) is Qequals1 comma 200minus9.5pplus16.2p Subscript pplus0.2Y, 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 Subscript p is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 60 cents perpound, p Subscript p is 21 cents per pound, and Q is 1 comma 400 thousand metric tons per year. Calculate the price elasticity of demand for coconut oil and the cross-price elasticity of demand(with respect to the price of palm oil). The price elasticity of demand is epsilonequals nothing. (Enter your response rounded to three decimal places and include a minus sign.)
Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander