What happens to the equilibrium price and quantity

Reference no: EM13201188

The widget industry in Springfield is competitive, with numerous buyers and sellers.
Consumers don't differentiate among the various brands of widgets (no product differentiation).
The industry demand curve is given by:
Qd = 998 - 5Pw + 4 Y - 6Pg
And the industry supply curve is given by
Qs = +15Pw - 3 Wage
Where Pw represents the price of widgets, Pg is the price of gasoline, Y is disposable personal income in Springfield, and Wage is wages paid to workers in widget factories.
Currently, Y= $10, Pg = $3, and Wage = $20.
Suppose Springfield's economy moves into a recession and Y falls to $9 and rising unemployment allows widget makers to reduce wages to $18 per hour. What happens to the equilibrium price and quantity?

Reference no: EM13201188

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