The demand equation for resale homes is P = 50 - Q_D. The supply equation for resale homes is P = 20 +0.5Q_S, where P is the price of a resale home in dollars ('000s), Q_D is the quantity of resale homes demanded ('000s), and Q_S is the quantity of resale homes supplied ('000s). The resale homes market is initially in equilibrium, and income is $120,000.

1. Plot the demand and supply curves for resale homes on the graph sheet provided .

1. Find the equilibrium price and equilibrium quantity of resale homes from your graph .

1. Calculate consumer surplus and producer surplus for resale home buyers and sellers when the resale housing market is in equilibrium .
2. Calculate the elasticity of demand for resale homes when house price increases from $30,000 to $40,000 . Interpret your results.
3. If a 10% increase in the price of recreational vehicles (RVs) lead to an increase in the quantity demanded for housing from 10,000 to 15,000 units, calculate the cross-price elasticity of demand between houses and RVs. What is the relationship between houses and RVs ?

As a result of an increase in income from $120,000 to $180,000, the demand curve for resale homes is: P = 110 - Q_D.

1. Use this information to calculate the new equilibrium quantity and price of resale homes .

1. Calculate the income elasticity of demand for resale homes. Interpret your results .