Consider the market for Good X, where the equilibrium price of Good X is $20per unit and the equilibrium quantity is 100 units. Empirical studies report that the demand and supply functions of Good X are linear, the priceelasticity of market demand is -2 and the price elasticity of supply is +1.

a) Derive the direct demand function (QD = f(P)) and the direct supply function (QS = f(P)) by using the information above.

b) Derive the inverse demand function (P = f(QD)) and the inverse supply function (P = f(QS)) from your answer to question a).

c) Draw the demand and supply curves. Show the equilibrium quantity (Q*) and price (P*) in the figure.

d) Determine the slope of your demand and supply curves.

e) Determine Consumer surplus at the price of Good X at $20. If the price decreases to $10, what is the new consumer surplus?