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What is a formula for the equilibrium price of roses

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Reference no: EM132471375

The demand function for roses is given as: Qd = a + bp + fpc and the supply function is given as: Qs = c + ep, where: 

(1) a, b, c, e, and f are constants (with a > 0, b < 0, c > 0, e > 0, and f > 0) and

(2) Qd and Qs are quantity demanded and supplied, respectively, with p the price of roses, and pc is the price of chocolates. 

What is a formula for the equilibrium price of roses, which will depend upon a, b, c, e, f, and pc ? Using this formula, verify that an increase in the price of chocolates will increase the equilibrium price of roses. Of course, without specific values to the constants you cannot draw specific demand and supply curves, but how to sketch and explain why an increase in the price of chocolates increases the equilibrium price of roses in this case.

Reference no: EM132471375

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