You have been hired as a new demand forecaster for Dr. BKS Enterprises.

You have been hired as a new demand forecaster for Dr. BKS Enterprises. Unfortunately the previous forecaster left the job leaving you very little information about how to do your job, and about the demand for your product.First, with regard to the market demand for your product, all you have are two small pieces of information. “At a price of $200 you know that 40 units will be demanded. And at a price of $160 you know that 80 units will be demanded.” The same holds for supply. All you know is this: “At a price of $90 there will be 30 units supplied. And at a price of $120 there will be 45 units supplied.”1) Using this information, write down the direct demand function and inverse demand function for your product.2) Also write down the direct supply function and inverse supply function for your product.3) Using these, calculate the equilibrium price and equilibrium quantity for your product in the market.4) Finally, using all this information, calculate the consumer surplus and producer surplus that exists in the market based on this information.After you have done this, you find that your predecessor has left you a bit more information. You find a scrap of paper that says the following: “Our demand depends on income and the price of our competitor’s product. Income is 100 and its coefficient is .8. The price of our competitor’s product is 180 and its coefficient is .5”. The scrap of paper also says, “Supply depends on the price of inputs, and that price is $90 and its coefficient is (-.5).”Based on this information, tell me:5) Is your product a normal good or an inferior good? How do you know?6) Also, are your product and your competitor’s product complements or substitutes? How do you know?You know, of course, that this information was used to produce the supply and demand functions that you arrived at earlier. You ALSO know that this information is somewhat out of date. You know that current income is 120, not 100. You know that your competitor’s current price is 220 not 180. And last, you know that the current price of inputs is 120 not 90. You have no reason to believe any coefficient is wrong.7) Use this more current information, which you know to be correct, to produce an update direct demand function and updated inverse demand function.8) Also use it to produce an updated direct supply function and inverse supply function.9) Then use these updated functions to produce a new equilibrium price and equilibrium quantity in your market.10) Finally, produce updated figures for consumer surplus and producer surplus based on these updated functions and updated equilibrium price and quantity.