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Find the new equilibrium solution

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Assume the daily market demand and supply functions for a good are Qd = 3000 - 6P + 0.002 INC0 , Qs = -1000 + 4 P
where INC0 is the exogenously determined average household income.

(a) Find the equilibrium price and quantity if the average income is 50,000 dollars.

(b) Assume average income rises to $55,000, write and graph the new demand function.

(c) Find the new equilibrium solution. What is the impact of rise in income?

Reference no: EM13878070

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