If the demand curve for coconut oil is expressed as q=1200-10p+16p_p+0.2y, where q is the quantity of coconut oil demanded in thousands of metric tons per year, p is the price of coconut oil in cents per pound, p_p is the price of palm oil in cents per pound and y is the income of consumers. assume that p is initially 50 cents per pound, p_p is 30 cents per pound, and q is 1300 thousand metric tons per year. the income elasticity of demand for coconut oil is.

Explanation:

To find the income elasticity we first must recall the formula

which is the percentage change in quantity when income increases in one percent.

From the demand curve we can find by taking derivative of Q with respect to Y:

Next we need to know what is the income at the equilibrium quantity of 1300, which we can back out from the data given in the question

Then

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