Find equilibrium price and quantity

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Qd = 200 - 20P1 + 20P2 + 3P3 + 2M where Qd is the demand for good 1, P1 is the price of good 1, P2 is the price of good 2, P3 is the price of good 3, and M is income.

Suppose that P2 = 2, P3 = 20, M = 1000

A. Now find equilibrium price and quantity.

B. Suppose the price of good 2 increased, holding everything else constant. Depict in a graph what would happen to the market price and quantity of good 1. I do not want numbers here you are inferring your answer from what you know about how good2 and good 1 are related.

C. Suppose a decrease in income occurred, holding everything else constant. Depict in a graph what would happen to the market price and quantity of good 1. I do not want numbers here you are inferring your answer from what you know about how good 1 and income are related.

D. Suppose an increase in input prices occurred, holding everything else constant. Depict in a graph what would happen to the market price and quantity of good 1. I do not want numbers here you are inferring your answer from what you know about how good 1 and input prices
are related.

E. Suppose, starting with the initial equilibrium in part A there is a simultaneous increase in the price of the input and an increase in income. What will happen to the market price and quantity of good 1? Justify your answer with graphs. Remember, with simultaneous shifts, one
variable's direction is uncertain and the other is not.

Reference no: EM133128261

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