QUESTION 1 1. Supply and Demand, Elasticity Consider the market for butter. The demand curve is given by QD = a+ b x P + cx I, where I is the average income and Pis the price of butter. The supply...

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Extracted text: QUESTION 1 1. Supply and Demand, Elasticity Consider the market for butter. The demand curve is given by QD = a+ b x P + cx I, where I is the average income and Pis the price of butter. The supply curve is Q° = d x P + e x Pm + f. where Pm is the price of milk. At above: a=250, b=-2, c=4, d=6, e= -20, and f= -20. 1. If I = 20 and Pm=2. What is the equilibrium quantity (no need of price)? It is 2. Suppose, currently, P=120, 1 = 20, and Pm=10. What is the income elasticity of demand at the current income level of I? It is 3. Suppose, currently, P=120, 1 = 20, and Pm=10. What is the cross-price elasticity of suppy at the current income price of Pm? It is 4. Suppose, currently, P=120, I = 20, and Pm=10. What is the price elasticity of supply at the current income level of P? It is