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The demand curve for widgets is given by Qd=4000-100p+30Pg, when Qd is the quantity of widgets demanded, P is the per capital income and Pg is the price of gizmos. The supply of Widgets is given by Qs=100p+1250
a. Are Widgets and Gizmos substitutes or complements? Answer this comparative statics exercise using calculus.
b. If Pg=10, calculate the price elasticity of demand at the equilibrium price and quantity of Widgets.
C. Draw a supply and demand diagram for Widgets and show the effect of an increase in the price of Gizmos on the equilibrium price and quantity,
D. Do the exercise in (c) using calculus; that is compute the comparative static derivatives for the changes in the equilibrium price and quantity of Widgets with respect to a change in the price of Gizmos
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