Assume an individual's demand for good #1 is given by the following function:

qq1 dd(pp1, pp2, yy) = 12 ? 2pp1 + pp2 ? ? 1 100? ? yy

where yy is the individual's income, pp1 is the price of good #1, and pp2 is the price of good #2 (a different good). A) Which one of the following statements is true? Clearly circle your selection (a, b, c, or d): (4 points) a) Good #1 is an inferior good and good #2 is a substitute for good #1. b) Good #1 is a normal good and good #2 is a substitute for good #1. c) Good #1 is an inferior good and good #2 is a complement for good #1. d) Good #1 is a normal good and good #2 is a complement for good #1.

B) Continue to assume the individual's demand for good #1 is given by the function above. In addition, assume the individual's income is $100 (yy = 100) and the price of good #2 is $1 (pp2 = 1). Suppose we know that, at the current price (pp1) for good #1, this individual's has an elasticity of demand equal to -2 (?? = ?2). What must be the current price of good #1?

Assume an individual's demand for good #1 is given by the following function: qi (P1,p2, y) = 12 - 2p1 + P2 - 100 . y where y is the individual's income, p, is the price of good #1, and p2 is the price of good #2 (a different good). A) Which one of the following statements is true? Clearly circle your selection (a, b, c, or d): (4 points) a) Good #1 is an inferior good and good #2 is a substitute for good #1. b) Good #1 is a normal good and good #2 is a substitute for good #1. c) Good #1 is an inferior good and good #2 is a complement for good #1. d) Good #1 is a normal good and good #2 is a complement for good #1. B) Continue to assume the individual's demand for good #1 is given by the function above. In addition, assume the individual's income is $100 (y = 100) and the price of good #2 is $1 (p2 = 1). Suppose we know that, at the current price (p1) for good #1, this individual's has an elasticity of demand equal to -2 (c = -2). What must be the current price of good #1? (4 points)