The following are market demand and supply equations for baked beans:

Q_D = 80 6P

Q_S = 20 + 6P

where, P is price in (UK pounds), Q_S and Q_D are quantity supplied and demanded of the product, respectively.

A)Solve the equations to compute the equilibrium price and quantity.

B)Draw the demand and supply curves for prices 0, 1, 2 ... 8.

C)Suppose consumers' income increases and baked beans are considered as inferior goods. As a result, the new demand equation is Q_D = 60 6P. Find the new equilibrium price and quantity of baked beans.

D)Your economist friend told you that because of the change in demand, price elasticity of demand for baked beans changed. Is your friend right? Explain.

E)Use the demand equation in part (c) to compute the price elasticity of demand between 5 and 6. Use the mid-point (arc) method.