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1. The demand curve is Qd=50-8P; The supply curve is Qs=-17.5 +10P
a) What is the equilibrium price and quantity?
b) What is the market outcome if the price $2.75? What do you expect to happen? Why?
C) What is the market outcome if the price is $4.25? What do you expect to happen? Why?
2. Assume initial equilibrium in the domestic automobile market. Using supply and demand analysis explain what will happen to both the equilibrium price and quantity if the following happens:
a) You hear on the news that a major technology breakthrough for producing automobiles has happened.
3. Assume initial equilibrium in the domestic automobile market. using supply and demand analysis explain what happen to both the equilibrium price and quantity if the following happens:
a) You hear on the news that the Japanese have increased the price of their cars (price of a substitute).
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