DEMAND-SUPPLYThis is the demand and supply in the local market for running shoes produced by the local companies.

a)Calculate the elasticity of demand for each price interval (ie. $65 to $55, etc.)

b)In response to the growing interest in the healthy living and to encourage young students to become active, the provincial government has just announced a new price ceiling of $55 on running shoes. Explain the effect on the new price and quantity sold for running shoes, and whether this is the appropriate policy.

c)"Running shoes and product X have a positive cross price elasticity, therefore, an increase in the price of product X will cause a decrease in the equilibrium quantity sold of BOTH products".TRUE or FALSE

\f