Consider the following market demand curve for automobiles:

QD= 30010P+ 5Pa5Pb+.5I

Where P is the "own" price of the good, P a and P b are the prices of other goods,and I is a measure of average household income.

Suppse P = 10, Pa= 4,Pb= 8 and I= 40, which implies that QD=3001010 + 5458 +.540 =200.

(a) What is the own-price elasticity of demand?

(b) Is good A a substitute or a complement? If this is the demand for auto-

mobiles, give examples of what good A might be?

(c) Is good b a substitute or a complement? If this is the demand for auto-

mobiles, give examples of what good b might be?

(d) Does the equation imply that automobiles are a normal good, or an inferior good?