A firm has estimated the following demand function for its product: Q = 8 - 2P + 0.101I + A where P is the product price, Q is quantity demanded per month in thousands, I is an index of consumer income, and the A is advertising expenditures per month in thousands. Suppose that P = $10, I = 120, and A = 10. Determine the values for quantity demanded, income elasticity of demand, price elasticity of demand, and the advertising elasticity. (Use the point formulas to complete the required elasticity calculations).
The market supply and demand functions for a product traded on a perfectly competitive market are given below: QD = 40-P QS = -5 +4P. Based on this information, determine the equilibrium price and quantity in this market.