Question 2: A company is granted a patent on automobile technology which, when fitted in a car, will park the car into a parking spot automatically.

a) Assume that demand for this automatic parking technology is positive and show the equilibrium price and quantity in the market.

Question 3. Illustrate graphically and explain the income and substitution effects of a wage decrease on hours of labor supply for the case in which the individual's labor supply curve is backward bending. Graphically derive the individual's labor supply curve.