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Equilibrium quantity of widgets after these two changes

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Reference no: EM132222743

QD=700-100P+0.5M+30PR

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=900+57.5P

Widgets are _________, and widgets and wodgets are _____________.

a. an inferior good; substitutes.

b. a normal good; substitutes.

c. an inferior good; complements.

d. a normal good; complements.

Assume that M=$61,000 and PR=$250 The equilibrium price of widgets is?

The equilibrium quantity of widgets is?

Now assume two events occur: income falls to $58,000 and supply conditions change such that QS=-300+50P. Solve algebraically for the new equilibrium price of widgets after these two changes.

Solve algebraically for the new equilibrium quantity of widgets after these two changes.

Reference no: EM132222743

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