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Question: suppose the supply curve for apples is given by qs...

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Suppose the supply curve for apples is given by QS = 2P, where QS is the quantity offered for sale when the prices is P. Also, suppose the demand curve for apples is given by QD = 182 − 4P I, where QD is the quantity of apples demanded when the price is P and the level of income is I.

a) Find the equilibrium P and Q when I = 6.

b) Find price-elasticity of demand at the equilibrium when I = 6, and give an interpretation in terms of percents and classify the elasticity (elastic or inelastic).

c) Find the income-elasticity of demand at the equilibrium when I = 6, and give an interpretation in terms of percents. What type of good is this (normal, inferior, luxury).

d) Find the equilibrium P and Q as a function of I.

e) Find the price elasticity of demand as a function of P and I and determine when this is unitary elastic.

f) Find the income-elasticity in terms of P and I.

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