1) The bread market supply is Qs = 20 + P and the bread market demand is Qd = 240-P.

a) Calculate the equilibrium price and quantity in the market (5 points).

b) Graphically illustrate the demand and supply of bread using the equations above. Show the x and y intercepts, as well as the x and y coordinates of the equilibrium. (5 points). Label all axes correctly (as how economists draw a supply and demand diagram).

c) Calculate the elasticity of supply at the equilibrium, using the point elasticity formula. (5 points)

2) Suppose that your demand for pants is Qd = 80 - 2P + 0.5Y, where Y is the minimum wage.

a) If the minimum wage rises to $20, calculate the income elasticity of demand when the price is $30. (5 points)

b) Based solely on your answer in part a, are pants normal and or inferior and or luxury goods and or necessities? More than one answer may be the correct answer. Explain. (5 points). Do not provide and answer using what you think pants are.