The demand equation for good C is given by the following equation: QC=521.5PC+0.4PD where PC and PD are expressed in dollars per kilo and QC in kilos. Assume PC=$20 and PD=$20.

1-What is the quantity demanded of good C?

2-Graph the demand curve for good C. The graph must be accurate.

3-Go back to your graph and plot the consumer surplus when PC=$20.

4-Calculate the consumer surplus you represented in answer to question 03. You must show your calculations.

5-A friend asks you to explain to her what this surplus represents. How would you explain it using the graph you drew? Your explanation should be based on reading the graph you presented in question 03

6-Calculate the price elasticity of demand for good C.

7-Give an economic interpretation of your result in question 06

8-What impact will a price increase have on consumer spending on that good? Justify your answer without doing any calculations.

9-Calculate the cross-price elasticity between good C and good D. What do you deduce about the nature of the economic relationship between the two goods?

10-Would the interpretation of your result have been the same if PD=25$? Give an explanation without doing any calculations.