Calculate the income elasticity of demand first

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Consider the following weekly supply and demand tables for product X: P 12 10 8 6 4 2 Qd 0 5 10 15 20 25 Qs 35 30 25 20 15 10 a. Draw the supply and demand curves on the same diagram. Determine the equilibrium price and quantity and demonstrate it in your graph. b. On the same diagram, show the new equilibrium P & Q when demand has increased by 20% and supply has decreased by 20%. Discuss your answer. c. Demonstrate the impact of a government price control set at P = $10. Demonstrate by number and in the graph. Discuss your answer. c. Calculate both the POINT and ARC elasticities of demand when the price moves from $6 to $4. Write the formula and show your work. d. Redraw the Demand curve in a new diagram. Demonstrate the Total Revenue change geometrically and indicate the Loss and Gain areas between the prices of $5 and $2 (Price has moved UP from $2 to $5). e. If for a product, a 10% increase in consumer income leads to a 20% decrease in sale, how would you evaluate the Income Elasticity of Demand? Is this a Normal Good or an Inferior good? Calculate the Income elasticity of Demand first and then give your explanations for both questions. f. If a 10% increase in the product such as Y, leads to a 20% decrease in the sale of Product X, then what can you say about the Cross Elasticity of Demand for X & Y? Are X & Y Substitutes or Complements? Calculate and Explain

Reference no: EM13149654

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