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1. Assume that a competitive market is currently represented by the following supply and demand equations:
Qs =p- 20-5p0 , Qd=315-0.5p+ w
where p is the price of the good, p0 is the price of a related product ,and W represents the consumers' income in terms of the hourly wage.
a. Derive expressions for the equilibrium price and equilibrium quantity that are functions of the hourly wage(w) and the price of the related product (p0)
b. State the change in the price of the related product (?p0) that is required to increase the supply of the product by 10 units at every possible price. Make sure your answer has the appropriate sign.
c. Is the related good represented by P0 a complement or substitute in production? be sure to explain your answer.
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