1. Suppose the market demand for a good consists of two consumers, 1 and 2, where their respective individual demands are given by: D1 (p)=max[200 4p,0] and D2 (p)=max [100 p, 0).

a)On one diagram graph the two demand curves as well as the resulting market demand curve. Label the intercepts appropriately.

b)Suppose supply is given by p=40, that is, the supply is perfectly elastic. Find the amount purchased by each consumer. Illustrate your answer with a graph.

c)Now, suppose instead the supply is given by q=20. Find the equilibrium price. Illustrate your answer with a graph.

2. Calculate the income elasticities for the following demand functions.

a) x(p,m)= m/2p*

b) x(p,m)= 10/p*