please explain to me step by step how to find the
the answer that i received before, when i substitute the price in de
- The following represents demand for widgets (a fictional product):
QD = -47,214 – 90P + 0.8M - 2PR
where P is the price of widgets, M is income, and PR is the price of a related (fictional) good, the wodget. Supply of widgets is determined by
QS = 400P – 15,550
- Determine whether widgets are a normal or inferior good, and whether widgets and wodgets are substitutes or complements.
- Assume that M = $68,500 and PR = $53. Solve algebraically to determine the equilibrium price and quantity of widgets.
- Generate a supply/demand graph in Excel. Be sure that P is the vertical axis and Q the horizontal. Does the graphical equilibrium correspond to your algebraic equilibrium?
- Now assume two events occur: income changes such that M = $69,700 and supply conditions change such that QS = 500P – 16,340. Solve algebraically for the new equilibrium price and quantity of widgets after these two changes.
Demand curve represents quantity demanded corresponding to different price level. Demand curve is downward sloping because as the price increases the quantity demanded decreases.
Supply curve represents quantity supplied corresponding to different price levels.Supply curve is upward sloping because as the price increases quantity supplied increases.
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