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Here is the market for Cruel Shoes:
Demand: Q = 200 - 2P
Supply: P = 2P - 40
A. Solve algebraically for market equilibrium. You must show your work to get credit.
B. Graph the S and D curves on one graph. Label the axes and the equilibrium. Incomes rise, and, as a result, the new demand is: Q = 240 - 2P
C. Solve algebraically for the new equilibrium if the supply curve remains the same.
D. Graph the new demand curve on the same graph and label the new equilibrium.
E. Are Cruel Shoes a normal or inferior good?
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