The demand function for apples is the following. Qn = 10 – Pn + 0.2Y +0.5 Pc – 2Ps + 0.2A Where: Qn = annual sales of apples (millions of kilos) Pn = price of apples (£1 per kilo) Y = disposable income in the UK £trillions (£10 trillions) Pc = price of a pies £ per kilo (£2 per kilo) Ps = price of pear (£2 per kilo) A = advertising measured in hundreds of thousands of £5 (use as 5 in your calculations) What is the income elasticity of demand, and what type of product apple is based on this information? a. 9/2, normal b. 2/9, necessity c. -9/5, inelastic d. -1/9, inferior. e. All the other answers are wrong.

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The demand function for apples is the following.

Qn = 10 – Pn + 0.2Y +0.5 Pc – 2Ps + 0.2A

Where:

Qn = annual sales of apples (millions of kilos)

Pn = price of apples (£1 per kilo)

Y  = disposable income in the UK £trillions (£10 trillions)

Pc = price of a pies £ per kilo (£2 per kilo)

Ps = price of pear (£2 per kilo)

A = advertising measured in hundreds of thousands of £5 (use as 5 in your calculations)

 

What is the income elasticity of demand, and what type of product apple is based on this information?

a. 9/2, normal
b. 2/9, necessity
c. -9/5, inelastic
d. -1/9, inferior.
e. All the other answers are wrong.
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