Question 2: [25 marks] A manufacturer of automobiles is planning a new model and wants to determine the responsiveness of demand in a number of scenarios. The demand function for the new model is given by the following function: Q = 30000 - 3P + 20001n(PA) +Y Where Q is the quantity sold of the new model, Pis the price for the new model, PA is the price of the competitor's model and Y is the annual income of a typical purchaser. The new model price is planned to be 20,000 and the competitor is charging 25,000. The annual income of a typical purchaser is 30,000 (a) The manufacturer wishes to determine the responsiveness of the demand for the new model if the price of a competitor's model changes. Which measure of elasticity would be appropriate to fulfil this requirement? And provide a calculation of its value. (6 marks) (b) The manufacturer also requires knowing how the quantity purchased of the new model might change in relation to its price. Which measure of elasticity would be appropriate to fulfil this requirement? And provide a calculation of its value. (6 marks) PLEASE TURN OVER MN-2506 Academic Year 2021-22 (c) The manufacturer of the model has been advised to expect a period of rapid economic growth in which the annual income of a typical purchaser is expected to rise substantially. They would, therefore, like to measure the sensitivity of how the quantity demanded of the new model might change in relation to the annual income of a typical purchaser. Which measure of elasticity would be appropriate to fulfil this requirement? And provide a calculation of its value. (6 marks) (d) Discuss your findings. (7 marks)