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Suppose that you have estimated the following demand curve: Q D = 1200 4 P + .01 I You know that the current market price

Suppose that you have estimated the following demand curve:

QD = 1200 4P + .01I

You know that the current market price is $11 and average income (I) is $40,000.

a)Calculate the markets total Demand?

b)Calculate the market's consumer surplus.

c)Calculate the price elasticity of demand.

d)Is the price elasticity of demand calculated in Question #1c elastic or inelastic?

e)Calculate the income elasticity of demand

f)Based on the income elasticity of demand calculated in Question #1e, is this product a normal good or an inferior good?

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