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March 12th, 2014, 11:43 AM  #1 
Newbie Joined: Mar 2014 Posts: 1 Thanks: 0  Calculate Price and income elasticity's
I am supposed to calculate the price elasticity of demand and the income elasticity of demand from the demand equation below. The problem is that I don’t know how to calculate them when I, P, and Q are unknowns. Or are the elasticity’s simply just the coefficients of P an I? I would really appreciate if someone could help me out here. Demand equation: Q = a – bP + cI + dT Q = 514.2669 – 242.971P + 1.224164I + 2.931228T Elasticity formulas: Price elasticity of demand: b(P/Q) Income elasticity: c(I/Q) Q = Demand estimation P = Price I = Income T = Temperature 

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