The market demand function for x is the expression 2

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The market demand function for X is the expression 2 4 M X P = . a) Calculate the price elasticity of demand when M=160 and X=10. Show all your steps. b) In order to increase the amount of money consumers spend on X, should the price be changed to increase or decrease the price elasticity? (Be careful in reporting your answer, elasticities are negative numbers, e.g. -10 is SMALLER than -5) ? Briefly explain. Q11. 5 points. Draw an Income Consumption Curve representing a situation where GOOD Y IS A NORMAL GOOD AND GOOD X IS AN INFERIOR GOOD Q12. 5 points Only 3 people in Victoria like yams. The demand of one of them is given by by q = 6 p while the demand for EACH of the other TWO is given by q = 3 p . Draw the aggregate demand curve for yams. Label your axes and indicate important quantities and prices. Q13. 6 points . In a competitive exchange economy with two representative individuals, a general equilibrium is characterized by 6 conditions. Write down these conditions and briefly explain their economic meaning. Beer Nuts M 100 140 80 50 58 60 71
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