The price elasticity for rice is estimated to be -0.4 and the income elasticity is 0.8. At a price of $0.40 per pound and a per capita income of $20,000, the demand for rice is 50 million tons per year.
a) if the price of rice increases to $0.41 per pound and income per capita remains at $20,000, what will be the quantity demanded?
the change in quantity demanded is
"-0.4\u00d7\\frac{(0.41 - 0.40)}{0.40}= -1"
so the new quantity demanded is
"Qd = 50 - 1 = 49" million tons
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