1. Suppose demandisdescribedbytheequationQd =80�­2p. Initially,thepriceis$30/unit. Butthenthepricechangesto $32/unit. What is the price elasticity of demand?

2.Suppose supply isdescribed by theequation Qs =�­10+p. Initially,theprice(p0)is$30/unit. Then,the new price(p1)is $32/unit. What is the price elasticity of supply?

3. Suppose the income of buyers (Y) increases by 10 percent (calculated as change in Y/average Y) and, as a result, the quantity demanded of the good increases by 2 percent (calculated as change in Qd/average Qd). Check the correct statement(s):

A. The income elasticity of demand for this good is 1/5

B. The income elasticity of demand for this good is 5

C. A 1% increase in buyers' income leads to a 5% increase in their quantity demanded

D. A 1% increase in buyers' income leads to a 0.2% increase in their quantity demanded

E. The good is inferior

F. The good is normal or superior