ECO415/ECO120 Exercise 3 The following table shows the market demand and supply schedules for imported chicken in the market. Price Market Demand Market Supply (RM/ kg) (kg) (kg) 8.00 130 60 8.50 110 70 9.00 90 90 9.50 70 110 10.00 50 130 10.50 30 150 a) If a legal ceiling price is established at RM8.50, calculate the amount of shortage or surplus for the imported chicken in the market. (1 mark) b) As a result of bird flu disease, Malaysian government has reduced the amount of imported chicken supplied by 40kg at each price level. Using a graph paper, determine the new equilibrium price and output of imported chicken in the market. (3 marks) C) Calculate the price elasticity of demand for the imported chicken when its price decreases from RM9.50 to RM8.50. State the degree of elasticity of demand. (3 marks) d) When consumers income increases from RM2,000 to RM5,000 quantity demanded for good J decreases from 500kg to 200kg. Calculate the income elasticity of demand for good J. State the type of good J. (3 marks) Page