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The inverse demand for Tires is: P = I - 0.5QD 20 + .0005
The current market price is $11 and the average income (I) is $100,000.
a) Calculate the market total Demand? Calculate the market's consumer surplus. Draw the Demand Curve and identify the price quantity and label the axes for price and quantity.
b) Calculate the price elasticity of demand. Is the Price elasticity of demand calculated in Question #1c elastic or inelastic? Calculate the income elasticity of demand.
c) Based on the income elasticity of demand calculated in Question #1e, is this product a normal good or an inferior good?
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