When the price of a car falls from 12 000 to 10 000, a car dealer notices that sales of this model rise from 100 to 120 per week. [20 marks]

A)Define what is meant by the price elasticity of demand? Calculate the price elasticity of demand using the arc method and explain your answer by words and graph.

B)For the same car, if income of people increases from 1000 to 1100, their quantity demanded will increase from 100 to 105.

Define what is meant by the income elasticity of demand? Calculate the income elasticity of demand using the arc method and explain your answer by words