Solve for the equalibrium price and quantity

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Reference no: EM131242565

Suppose that the supply for potatoes is Qs=2000+200P and the demand for potatoes is Qd=4000-300P-2I, where P is Price and I is Income. Let I=500.

a) are potatoes a normal good or an inferior good based on the demand function? briefly explain

b) solve for the equalibrium price and quantity

c) calculate the price elasticities of demand and supply at market equalibrium

d) suppose the govt imposes a price support at P=4 by paying 4 dollars for any potato not sold in the market. what are the quantities of potatoes sold in the market and sold to the government?

Reference no: EM131242565

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