Exercise 1: Demand, Elasticity and Surplus (40 points) (a) (10 pts) A person's demand is given by the following equation: P = 8 30'059 where Q is the quantity demanded at price P. What is the elasticity of demand when P = 10? For for the next set of questions, use the following setup: A person's demand for chocolate is given by the following equation: Q = 900 2UP + 0.02:!r where Q is the quantity demanded at price P when the person's income is I. Assume initially that the person's income is $5,000. (b) (5 pts) At a price of $30, what is the price elasticity of demand for chocolate? (c) ( 5 pts) At a price of $30, what is the consumer surplus