Answer to Question #117944 in Economics for Asare Tyger

Question #117944

Derive an equation to calculate the income elasticity of demand at any point on the following function: Q = 40 - Y-3/2

Expert's answer

The income elasticity of demand at any point on the function Q = 40 - Y^(-3/2) is:

Ei = -b×Y/Q = 3/2×Y/Q.

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