The market demand for a good is given by the demand function: QD=48-2P
The market supply curve for the good is given by Qs=12P-2

i) What is the sellers reservation price for the good?

ii) Find the equilibrium price and quantity sold of the good.

iii) Sketch the demand and supply curves, clearly illustrating market
equilibrium.

iv) Use the point Price Elasticity of Supply (PES) formula to calculate PES at the equilibrium price and quantity. Interpret your result.

v) Calculate the producer surplus at market equilibrium.

vi) You are told that the Income Elasticity of Demand (YED) for this good is calculated to be 3. Interpret this result.

vii) Suppose a recession decreases the income of consumers. With the aid of a supply and demand diagram, explain how market equilibrium would be affected.