The demand for coffee is given by the function: 𝑄 = 8.5 ― 𝑝 ― 0.3𝑝𝑠 +0.1𝑌, where
Posted: Sun Jun 05, 2022 11:29 am
The demand for coffee is given by the function: 𝑄 = 8.5 ― 𝑝 ―
0.3𝑝𝑠 +0.1𝑌, 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 𝑄 = 5 and 𝑌 =
25 and interpret your answer.
b. Calculate the cross-price elasticity of demand when 𝑄 = 5 and
𝑃𝑠 = 0.5 and interpret your answer.
0.3𝑝𝑠 +0.1𝑌, 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 𝑄 = 5 and 𝑌 =
25 and interpret your answer.
b. Calculate the cross-price elasticity of demand when 𝑄 = 5 and
𝑃𝑠 = 0.5 and interpret your answer.