The market demand for wheat is Q = 100 - 2p + 1pb + 2Y.If the price of wheat,p,is $2,and the price of barley,pb,is $3,and income,Y,is $1000,the income elasticity of wheat is

Question

Quizplus · Accepted Answer

The income elasticity of demand is calculated as (dQ/dY) * (Y/Q). Given the demand function Q = 100 - 2p + 1pb + 2Y, the derivative with respect to income Y is 2. Substituting the given values into the demand function, Q = 100 - 2(2) + 1(3) + 2(1000) = 2099. Therefore, the income elasticity is 2 * (1000/2099).

The Market Demand for Wheat Is Q = 100 -