From the original setup in Problem 2, suppose that the quantity supplied of flat panel TV stands is represented by QS = 8P – 20 Pi – 200, where P is the price of the stand and Pi is the price of hardware inputs, and that quantity demanded is QD = 4,700 – 2P + 0.5I, where I is income. Assume that at the equilibrium, income is $1,000 and the hardware price is $5.
a. Calculate the income elasticity of demand using calculus.
b. Calculate an input elasticity of supply using calculus.