The coconut oil demand function is Q = 1200 -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 45c per point, pp is 31c per pound, and Q is 1,275 thousand metric tons per year. a. Calculate the price and cross-price elasticities of demand for coconut oil.

The coconut oil demand function is Q = 1200 -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 45c per point, pp is 31c per pound, and Q is 1,275 thousand metric tons per year. a. Calculate the price and cross-price elasticities of demand for coconut oil.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: If the cross-price elasticity of demand between Softballs and Baseballs is -1.2, the price of…

A: Considering the cross price elasticity of demand, there is the existence of complementary goods case…

Q: Why do business people need to know the importance of price elasticity of demand for the products…

A: (Q)Why do business people need to know the importance of price elasticity of demand for the products…

Q: If 50 units of.a good are sold at a price of $20 and 80 units are sold at a price of $15, what is…

A: Price elasticity of demand measures the responsiveness of change in quantity demand due to change in…

Q: Suppose the price elasticity of demand for good A is 1.25. If the price of good A increases by 10%,…

A: Price elasticity of demand is the responsiveness of change in quantity demanded of good due to the…

Q: What is the price elasticity of demand. if The price of premium rice increases from P38.00 to P40.50…

A: The price elasticity of demand can be calculated by using the following formula:

Q: Suppose the cross-price elasticity of tea with respect to the price of coffee is 0.6, and the price…

A: Cross elasticity of demand is defined as the measurement of the relative change in quantity demanded…

Q: If the absolute value of the price elasticity of demand for cell phone service is 3, then if the…

A: Demand is the willingness and ability of consumers for consuming and buying goods and services at…

Q: income elasticity of demand

A: The % in Q change to % in Income (I) change calculates ei or income elasticity. The formula is given…

Q: Your research estimates the (own) price elasticity of demand for coffee as 0.78 in absolute terms.…

A: demand refers to the amount of goods and services needed by the consumers.

Q: Does cross-price elasticity of demand between Commodity A and Commodity B have to be the same as…

A: The percentage change in the quantity demanded of one good as a result of the price change of an…

Q: The cross-price elasticity of hamsters and hamster food is -0.3, where the percentage change in…

A: Cross price elasticity measures the percentage change in the price of a good due to the percentage…

Q: During the summer months, Bruce's Market anticipates that the price of hot dogs will increase by 15%…

A: The elasticity of demand:Elasticity is defined as the responsiveness to change in one variable. When…

Q: CALCULATE THE PRICE ELASTICITY OF DEMAND GIVEN THAT WHEN PRICE CHANGES BY 10% THE QUANTITY CHANGES…

A: # The formula for elasticity of demand is given as: Ed = % Change in quantity/% change in price.

Q: Tennis balls and tennis rackets are complements. If a 8 percent increase in the price of tennis…

A: Commodities that are used jointly by individuals are called complements. These two commodities have…

Q: Describe the concept of price elasticity?

A: Meaning of Microeconomics: The term microeconomics refers to that situation under which the…

Q: cross-price elasticity of demand of 1.2

A: Cross-price elasticity: Cross elasticity of demand refers to the percentage change in quantity…

Q: Explain in your own words what information the income elasticity of demand provides. If a good is…

A: Note: You have uploaded two questions at a time. Hence, we shall answer only the first one for you.…

Q: The local baseball stadium's concession stands previously sold hot dogs for 80 cents apiece. At that…

A: When demand is price elastic, total revenue shifts in favour of a quantity change. When alternatives…

Q: Data from the Bureau of Labor Statistics shows that U.S. income increased by 10% while consumer data…

A: Change in income=10% Change in quantity demanded=∆in quantity demandedInitial quantity…

Q: If an increase in the price of coffee at Starbucks by 30% raises sales of coffee at Cafe Beans by…

A: It can be described as goods that can be used in place of one another to satisfy the needs of the…

Q: Define the concept of the price elasticity of demand. Given that the price of petrol in the UK has…

A: The law of demand states the inverse relationship between the price and quantity demanded. however…

Q: If due to a change in the price of a commodity from Tk. 250 to Tk. 200 per unit, its quantity…

A: What is the price elasticity of demand Answer: The new price is Tk. 250, the old price was Tk. 200…

Q: Why is the price elasticity of demand for coca cola greater than for soft drinks

A: Answer: Price elasticity of demand of a product depends on it availability of its close substitutes…

Q: On your weekly grocery shopping trip, you notice that the price ofspaghetti has gone up 50 cents a…

A: Meaning of Price Elasticity of Demand: The price elasticity of demand refers to the situation…

Q: Explain three determinants of price elasticity of demand.

A: Elasticity is a measure of a variable's response to a change in another variable; in most cases,…

Q: What is the elasticity of demand if the inverse curve of demand is P = (20 - 2Q)1/2 and 2 units are…

A: Given Demand function: P=20-2Q1/2 .... (1) The formula for price elasticity of demand:…

Question

Calculate the income elasticity of demand for coconut oil.

Is coconut oil a normal good at that price and quantity combination?

The coconut oil demand function is Q
=
1200 -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 45c per point, pp is 31c per pound, and Q is 1,275 thousand metric tons
per year.
a. Calculate the price and cross-price elasticities of demand for coconut oil.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define elasticity

VIEW

Step 2: Calculate elasticities.

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If the price of sugar were to double, would you use less of it? Explain in terms of the determinants of the price elasticity of demand.
When income increases by 10 percent (or numerically, 0.1), quantity demanded moves by 168 units. Assuming the income elasticity of demand is 4. What is the original quantity demanded? (assuming further that this is the point elasticity relative to the original point.) Please make sure you give a numerical answer with no units and/or space or period (.) or comma (,) before or after your answer. Enter your answer here
Respond to the following in a minimum of 175 words: Compare and contrast the price elasticity of supply and price elasticity of demand. Define income elasticity and how it distinguishes normal and inferior goods. How do you think income elasticity affects a normal good versus an inferior good? Provide a real-world example.
Consider the following demand function. Quantity demanded, Q, is a function of Price, P, such that Q=1/P. The change in the quantity demanded for a change in the What is the price elasticity of demand? price (the slope) is known to be 0 1 8 P 0-1/1/212 P² - 1 P2
If apples have an own price elasticity of -1.2, we know the demand is elastic. Can you explain why?
Identify three factors that are likely to affect the price elasticity of supply for rice. Clearly indicate the impact that each factor with have on the price of rice elasticity.
Define price elasticity of demand
What is the negative cross-price elasticity of demand? Please explain, thank you!
Suppose that the cross-price elasticity of demand for good m is 1.75 and price of good n falls by 10 percent. What is the relationship between good m and good n? How will the fall in the price of good n affect sales of good m?
Suppose that the quantity demanded falls by 31.7 percent when the price increases by 10.6 percent. Calculate the price elasticity of demand.