Homework Answers
Q1 - Last option is the right answer. Since the income goes up by 3% and the income elasticity is -2, the change in demand will be -2 * 3% = -6%, which will be shown as a downward shift in the demand curve
Q2 - Total demand: P = 100 - Q/10 or Q = 1000 - 10P = 1000 - 10*2 = 980
Demand for one shop = 980/10 = 98
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