1. Assume that the potatoes market consists of two types of consumers: A and B. For type-A consumers, potatoes are perceived as a normal product, while for Type-B consumers, potatoes are considered as an inferior product.

a. Describe the changes in the demand curve of each consumer group and the aggregate demand curve of the market as a whole if there is an increase in the income of both consumers?

b. What happens to the demand curve of each type of consumers and the aggregate demand curve of the market if there is a transfer of income from consumers A to consumers B?

2. A consumer regularly spends 5% of his income on buying Product X regardless the income level. Accordingly:

1. Product X is an inferior product
2. Product X is a neutral product
3. The consumer demand curve for product X is completely rigid
4. Product X is a normal product
5. All other answers are incorrect

3. The demand for X is given by the following equation