Assume that demand for a commodity is represented by the

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Assume that demand for a commodity is represented by the equation P = 10 - 0.2 Q d, and supply by the equation P = 2 + 0.2 Qs where Qd and Q s are quantity demanded and quantity supplied, respectively, and P Is the Nice. Use the equilibrium condition 0, = 04,

1: Solve the equations to determine equilibrium price.

2: Now determine equilibrium quantity.

3: Graph the two equations to substantiate your answers and label these two graphs as Dl and SI.

4: Furthermore: assume the demand for this product increases because of a change In income.

A: graph the new demand curve and label as D 2.

B: What will be the new equilibrium price and quantity compare to the initial one.

C.Is this product normal good or Inferior good?

Reference no: EM13375380

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