The coconut oil demand function (Bushena and Perloff, 1991) is Q=1,200-9.5p+16.2pp+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, pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 55 cents per pound, pp is 29 cents per pound, and Q is 1,375 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 ɛ=?????? (Enter your response rounded to three decimal places and include a minus sign.) The cross-price elasticity of demand is ɛ=????? enter your response here. (Enter your response rounded to three decimal places.)
The coconut oil demand function (Bushena and Perloff, 1991) is Q=1,200-9.5p+16.2pp+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, pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 55 cents per pound, pp is 29 cents per pound, and Q is 1,375 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 ɛ=?????? (Enter your response rounded to three decimal places and include a minus sign.) The cross-price elasticity of demand is ɛ=????? enter your response here. (Enter your response rounded to three decimal places.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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M8
Transcribed Image Text:The coconut oil demand function (Bushena and
Perloff, 1991) is Q=1,200-9.5p+16.2pp+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, pp is the price of
palm oil in cents per pound, and Y is the income of
consumers. Assume that p is initially 55 cents per
pound, pp is 29 cents per pound, and Q is 1,375
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 ɛ=?????? (Enter
your response rounded to three decimal places
and include a minus sign.)
The cross-price elasticity of demand is ɛ=?????
enter your response here. (Enter your response
rounded to three decimal places.)
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