Solved: Product in terms of income elasticity, Microeconomics

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Product in terms of income elasticity

Market Researchers at the Lawrence Company estimate that the demand function for a product is

Q = 75 P-2 I-2
Q is quantity demanded, P is Price, and I is Income.
Marginal cost is estimated to be $15.

a. They have their product priced at $30. Is this optimal? Why or why not.

b. What would you recommend their optimal price to be?

c. How would you classify the product in terms of it's income elasticity?

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Microeconomics: Product in terms of income elasticity

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