Please show steps

2. Elasticity of supply and demand

a.Compute the elasticity of demand at Q = 4 (thousand). Show the computation.

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b.Compute the elasticity of supply at Q = 12 (thousand).Show the computation.

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c.Assume income elasticity of demand is 1.5.By what percent would demand change if real incomes in New York and Los Angeles rise by 3% in an economic expansion?

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3. Assume the federal government imposes economic regulation on the airline industry as it did between 1938 and 1978.The regulated fare for the JFK-LAX route is $300.Show all computations.

a.Compute the Quantity Demanded.

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b.Compute the Quantity Supplied.

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c.Compute the shortage.

Average Fare in $ 1000 900 800 700 600 500 400 300 200 100 JFK-LAX Airline Traffic 4 6 8 10 12 14 Daily Passengers (in thousands) Demand Supply 16 18