a. Using the point elasticity method, derive an equation for the income elasticity of demand for toys.

b. Using the point elasticity method, derive an equation for the cross elasticity of demand for toys relative to

bike's price.

c. Are toys normal or inferior goods? Why?

d. Are toys and bikes substitutes or complements? Why?

e. Calculate the income elasticity of demand for toys for a consumer that purchases 20 toys and has an income

of 400 KD.

f. Calculate the cross elasticity of demand for toys relative to bike's price for a consumer that purchases 20

toys when the price of a bike is 12 KD.

g. Using the arc elasticity method, calculate the price elasticity of demand for toys for a consumer that has an

income of 400 KD if the price of a bike is 12 KD and the price of a toy changes from 1 KD to 2 KD.

h. Determine whether demand is elastic, inelastic, or unit elastic based on your calculation in part (g).

i. Using the point elasticity method, calculate the price elasticity of demand for toys for a consumer that has

an income of 400 KD if the price of a bike is 12 KD and the price of a toy is 2 KD.

j. Determine whether demand is elastic, inelastic, or unit elastic based on your calculation in part (i).

k. Write down the total revenue function as a function of P, when income is 500 KD and the price of a bike is

8 KD.

l. Use the total revenue test to determine the range of prices where the demand for toys is elastic and the

range where it becomes inelastic.