The economic consultant of ABC company estimated the market demand and supply functions for laptop computers are as follows:

QD = -5PLT + 2.5PPC+ 1.5Y + 200Pop + 6A - 10,000I

QS = 20PLT - 5PPC- 1000W- 150S - 1250R - 10,000I

Where:

Q is the quantity of laptop computers.

PLT is the average price of laptop computers (BD).

PPC is the average price of Personal computers (BD).

Y is per capita disposable income (BD thousands).

Pop is population (Million).

A is the advertisement expenditure by sellers of laptop computers (BD thousands).

I is the interest rate.

W is the average price of unskilled labor (BD per hour).

S is the average price of software (BD), and

R is the average cost of other raw materials used in production (BD).

Currently PLT = 300, PPC = 600, Y = 560, Pop = 3, A = 50, I = 0.08, W = 1, S = 8, and R = 0.06.

Use the above information to answer the following questions:

1.1. Determine the quantity demand of Laptop at current price

1.2. Derive the demand equation facing the company.

1.3. Determine the optimal price and quantity that maximize total revenue of this company.

1.4. Derive the supply equation of the industry.

1.5. Find the equilibrium price and quantity in this market?

1.6. Determine (a) Price elasticity of demand, (b) income elasticity of demand, and advertisement expenditure elasticity of demand.

1.7. Would you advice this company to increase or decrease its current price? Why?

1.8. If consumer income decreases to BD500 what will be the impact on equilibrium price and quantity?

1.9. Forecast next year Quantity Demand given that the price is to be reduced to BD250 next year and that per capita disposable income increases to BD600 and advertisement expenditure is to increase by 5%. (Assume that the price, income and advertisement expenditure effects are independent and additive).