There are 10,000 identical individuals in the market of commodity X, each with a demand function given by Qdx = 12 - 2Px, and 1,000 identical producers of commodity X, each with a function given by Qsx = 20Px, where Qdx is an individual's quantity demanded, Qsx is a single producer's quantity supplied, and Px is the price of the commodity

Subject:MarketingPrice:2.88 Bought3

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There are 10,000 identical individuals in the market of commodity X, each with a demand function given by Qdx = 12 - 2Px, and 1,000 identical producers of commodity X, each with a function given by Qsx = 20Px, where Qdx is an individual's quantity demanded, Qsx is a single producer's quantity supplied, and Px is the price of the commodity.

Suppose that from this condition of equilibrium, there is an increase in consumer's incomes (ceteris paribus) so that a new market demand curve is given by QD'x = 140,000 - 20,000Px.

a. Derive the new market demand schedule.

b. Show the new market demand curve (with the original equilibrium demand curve).

c. State the new equilibrium price and equilibrium quantity for commodity X.

d. Determine the Income Elasticity at the original equilibrium price and at the new equilibrium price. (Assume that the increase in income is 10%). Comment on the nature of commodity X.