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

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Quizplus · Accepted Answer

The income elasticity of demand is calculated as (dQ/dY) * (Y/Q). Here, dQ/dY = 2, Y = 1000, and 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 -