**a.** **When the demand increases by 12 units, the equilibrium price rises to $6.2093 and the equilibrium quantity rises to 67.7442 units.**

**b. The price elasticity of supply (PES) at equilibrium is 0.20. Since the price elasticity is less than 1, we conclude that supply is inelastic.**

From the given data, we can see that the equilibrium price is $4 and the equilibrium quantity is 68 units.

If the demand increases by 12 units at each point of price decline, the demand equation will be :

** **

and the supply equation will be:

Since Quantity demanded and supplied are equal at equilibrium, we can equate the demand and supply equations and solve for price (P). Equating the two equations above, we get,

**P = $6.2093**

Substituting the value of P in the demand equation, we get,

** units**

**b. Calculation of Price Elasticity of supply at equilibrium level.**

P₀ = $4

Q₀ = 61

P₁ = $6.2093

Q₁ = 67.7442

**% change in quantity = 11.05607%**

** **

**% change in price = 55.2325%
**

**Price Elasticity of Supply (PES):**

PES = 11.05607%
/ 55.2325%

**PES = 0.20
**