The respective demands for margarine (marg) and for meals away from home (mah) in the UK during the period 1920–1937, as functions of personal income r, were estimated to be: Dmarg(r) = Ar0.165 and Dmah(r) = Br2.39, for suitable constants A and B. a. Find and interpret the elasticities of Dmarg and Dmah w.r.t. r. b. How must the income r change to diminish the demand for margarine 5%? Round the answer to two decimals

The respective demands for margarine (marg) and for meals away from home (mah) in the UK during the period 1920–1937, as functions of personal income r, were estimated to be: Dmarg(r) = Ar0.165 and Dmah(r) = Br2.39, for suitable constants A and B. a. Find and interpret the elasticities of Dmarg and Dmah w.r.t. r. b. How must the income r change to diminish the demand for margarine 5%? Round the answer to two decimals

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 7E

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interpret the relationship of both elasticities from each other
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