8. a.In 2006, Willem De Kooning's abstract painting Woman IIIsold for $137.5 million. Portray this sale in a demand and supply diagram when the quantity is 1.Instructions:1.Use the line tool S to graphically show the supply of this painting. This line should only contain the two endpoints and should fully intersect the demand curve.2.Use the drop-line tool to graphically show equilibrium ($137.5 million).b.Comedian George Carlin once mused, “If a painting can be forged well enough to fool some experts, why is the original so valuable?”
9. Because of a legal settlement over state health care claims, in 1999 the U.S. tobacco companies had to raise the average price of a pack of cigarettes from $1.95 to $2.45. The decline in cigarette sales was estimated at 8 percent. What does this imply for the elasticity of demand for cigarettes?
10. Given the following income elasticities of demand:ProductIncome ElasticityMovies+3.4Dental services+1.0Clothing+0.5The values indicate thata 1 percent increase in income will increase the quantity of movies demanded by 3.4 percent.If the income elasticity coefficient is negative, it means thatthe good is inferior so that if income falls, the quantity demanded of the