Suppose the average income of a consumer named Warren decrease from R18000 to R12000. As a result, the quantity of product A demanded by Warren increase from 200 units to 280 units.

1. Use the ARC (midpoint) formula to calculate the income elasticity of demand for product A given the information above.

1. Based on your answer in 7.1, is product A an inferior good or a normal good? Substantiate your answer with reference to your calculated elasticity value.

1. With reference to the cross-price elasticity of demand, classify the following values and explain the type of product by providing your own example for each for each. Ec = -0.5 (3) Ec = 2.1