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The equation for a demand curve has been estimated to be Q = 100 – 10P + 0.5Y where Q is quantity, P is price, and Y is income. Assume that P = 7 and Y = 50. 
a. Interpret the equation. 
b. What is price elasticity at P = 7 and arc elasticity at the interval between P = 6 and P=7. 
c. What is income elasticity at Y = 50 and arc elasticity at the interval between Y = 50 and P=60. 
d. Now assume that income is RM70. What is the price elasticity at P = 8? Also, find out arc elasticity at the interval between P=7 and P= 8.

Microeconomics, Economics

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