The demand for Eyebooks at Georgetown University can be described by the following demand

function Qd = 5000 2PB + PP + 2PT 100I, whereby PB represents the price for an Eyebook,

PP is the price for an Eyephone (i.e. $ 500) and PT equals the price for an Eyepad (i.e. $ 600).

In the initial setting, the average income I is set to be 2. According to the latest official Eyeapple

statement, the supply of Eyebooks can be estimated such that Qs = 1500 + 3PB.

3.1 The Demand for Eyebooks (5P)

Depict the demand function for Ibooks graphically, and solve for the price elasticity of demand

for Eyebooks. According to Eyepples price policy the price for an Eyebook is fixed at $ 1000.

Please evaluate whether Eyepple's price policy reflects underlying market conditions? (Hint: Are

the equilibrium price, which you have calculated and Eyepple's price identical, or not? )

3.2 Eyebooks vs. Eyephones (5P)

What happens to the demand of Eyebooks, if the price for Eyephones increases from $ 500 to $ 600?

Are Eyebooks and Eyephones demand substitutes or demand complements?

3.3 Eyebooks vs. Eyepads (5P)

What happens to the demand of Eyebooks, if the price for an Eyepads increases by $ 100? Are

Eyebooks and Eyepads demand substitutes or demand complements?

3.4 Income Elasticity and Eyebooks (5P)

Calculate the income elasticity for an Eyebook, and briefly interpret your result (max. 3 sentences).

In particular, explain why the income elasticity for Eyebooks might deviate substantially from the

general level of income elasticity for laptops.