The demand for pencils by New York University students at the bookstore is given

Question

The demand for pencils by New York University students at the bookstore is given by the following equation, , where I is the average income of nyu students, in dollars per week, Q pencils is the quantity of pencils sold per week, and Pencils is the price per pencil, in dollars. Last week, the average income of New York Students students was $100 per week and the bookstore sold pencils for $1 each.

What was the price elasticity of demand last week?

Find what income elasticity of demand was last week.

Explanation / Answer

I = average income Q= demand for pencils P= price per pencil price elasticity = (dq/Q)/(dp/P) =(dq/dp)(1/100)=0.01(dq/dp) income elasticity = % change in demans/%change in income = (dp/P)/(dI/I) cheers :)

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