The demand for coffee is given by the function: π = 8.5 β π β
0.3ππ +0.1π, where p is the price of coffee, ps is the price of
sugar, and Y is consumer income.
a. Calculate the income elasticity of demand when π = 5 and π =
25 and interpret your answer.
b. Calculate the cross-price elasticity of demand when π = 5 and
ππ = 0.5 and interpret your answer.
The demand for coffee is given by the function: 𝑄 = 8.5 β 𝑝 β 0.3𝑝𝑠 +0.1𝑌, where
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