Question: The demand function for bicycles in Holland has been estimated to be Q Q = = 2,000+15 Y 7.5 P 2,000+15Y7.5P where Y is income

The demand function for bicycles in Holland has been estimated to be

= =

2,000+15Y7.5P2,000+15Y7.5P

where Y is income in thousands of euro, Q is the quantity demanded in units, and P is the price per unit. When P=150P=150 euro and Y=15,000Y=15,000 euro, what is:

The price elasticity of demand?

0.24

1.02

0.50

7.5

The income elasticity of demand?

1.02

0.14

0.20

1.00

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