1. Maria's hicksian demand for coffee is given by he(pe, P, D) = / 06 (2 ) where pe is the price of coffee and p, is the price of tea. The compensated own price elasticity p and the compensated cross price elasticity ep, are ? (a) Eqp= 3/5 and Ep = 3/5 (b) Exp = -3/5 and En = 3/5 (c) = -1 and Es= 1 (d) Ep = 5/6 and Ep= 6/5 (e) Ep = -1/3 and En= 1/3 2. If the income increases by 1% and the quantity demanded of good a increases by 1.6%. Good a can be described as a I. Normal good II. Necessity good Ill. Luxury good IV. Inferior good Which of the previous states are TRUE about good z? (a) Only II (b) I and II (c) I and III (d) III and IV