The market demand for potatoes is given by: Q = 1,000 + 0.31 - 300P + 299P',

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Question:

The market demand for potatoes is given by:
Q = 1,000 + 0.31 - 300P + 299P',

where,
Q = Annual demand in pounds
I - Average income in dollars per year
P = Price of potato in cents per pound
P' = Price of rice in cents per pound.

a. Suppose I = US$10,000 and P = US$0.25; what would be the market demand for potato? At what price Q = 0? Draw this demand curve.

b. Suppose I increases to US$20,000 and P' remains at US$0.25. What would now be the demand for potato? At what price Q = 0? Draw this demand curve. Explain why more potato is demanded at each price in this case than in part a.

If I returns to US$10,000 but P' drops to US$0.10, what would be the demand for potato? At what price Q = 0? Draw this demand curve. Explain why less potato is demanded at each price in this case than in part a.

In addition, calculate the following:
1. Price elasticity of demand.
2. Income elasticity
3. Cross-price elasticity