Q = 9 - 0.5P + 0.2(income) represents demand, and Q = 1 + 0.25P - 0.6(price of plastic) represents supply.

Q represents 1000 bottles of water, P represents the price of one bottle of water, income represents the new income of consumers,price of plastic represents the new wholesale price of plastic used to make bottles.

Can you tell which equation represents supply and which represents demand? How can you tell?

By looking only at the information given here, can you tell whether bottled water is a normal or an inferior good? How can you tell?

Calculate the initial equilibrium price and quantity of bottled water. Assume both Income and Price of Plastic = 0 (representing their initial starting values; that is: set income=0 and price of plastic=0).

Explain what will happen if the income of consumers increases at the same time that the price of plastic increases. Is there some unambiguous change we can expect using a simple sketch of the market? What do we not know? Draw the model and explain. Note that I am interested in the direction of the change only.

Calculate the new equilibrium price and quantity for the scenario in question 2 assuming the new income of consumers is 2 and the new price of plastic is 3 (set income=2 and price of plastic=3)