The market for Blu-ray movies is perfectly competitive, with the market supply curve given by O = 15P and the market demand curve given by Q = 400 - 10P. The resulting market equilibrium is P* = 16, Q*=240. (a) Calculate the price elasticity of demand at the market equilibrium. Is demand elastic or inelastic at this point, and what does this mean?   (b) Suppose that supply increases so that producers are willing to sell 10 more Blu-rays at any price, and at the same time demand decreases so that consumers are willing to purchase 40 fewer Blu-rays at any price. Find the new equilibrium price and quantity.

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