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PROBLEM #3 The demand and supply for a brand-name prescription drug in a region are as follows: Demand: Q: = 814 - 7"P + 46ng' + 4P1- + 45Y Supply: Q; = -880 + 2F where P represents the price per bottle of the brand-name drug, PG represents the price per bottle of the generic version of the drug, P1- represents the price per pound of herbal tea, and Y represents the income, measured in average hourly wage, in the region. Today, the price of the generic drug is $110 per bottle, the price of herbal tea is $14 per pound, and the average hourly wage is $18. (Assume that this drug is not covered by health insurance.) Using today's prices for the generic drug, tea, and income, nd the equilibrium price and quantity for this brand-name drug. Based on the demand equation, is herbal tea a complement or substitute for the brand-name drug? Briey explain your answer. Find the income elasticity of demand for the brand-name drug. Now holding the price of herbal tea at today's price, and the average hourly wage at today's average hourly wage, but keeping the price of the generic drug as a variable, nd the equilibrium price of the brand-name drug as a unction of the price of the generic time