Given below is the demand function for coconut oil. Q = 1,200 – 9.5P + 16.2Pp + 0.2 Y Where Q = quantity demanded of coconut oil P = price of coconut oil in cents per pound Pp = price of palm oil in cents per pound (palm oil is a substitute for coconut oil) Y = income of consumers Initially, Q = 1,275 thousand metric tons per year (Q = 1275) P = 45 cents per pound (P = 45) Pp = 31 cents per pound (Pp = 31) (a) Please calculate the Income at the above values of Q, P and Pp. and show your calculations (b) Please calculate the own point price elasticity of demand and show your calculations. (c) Please calculate the point cross elasticity of demand between palm oil and coconut oil and show your calculations.

Given below is the demand function for coconut oil. Q = 1,200 – 9.5P + 16.2Pp + 0.2 Y Where Q = quantity demanded of coconut oil P = price of coconut oil in cents per pound Pp = price of palm oil in cents per pound (palm oil is a substitute for coconut oil) Y = income of consumers Initially, Q = 1,275 thousand metric tons per year (Q = 1275) P = 45 cents per pound (P = 45) Pp = 31 cents per pound (Pp = 31) (a) Please calculate the Income at the above values of Q, P and Pp. and show your calculations (b) Please calculate the own point price elasticity of demand and show your calculations. (c) Please calculate the point cross elasticity of demand between palm oil and coconut oil and show your calculations.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

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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