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1: Assume that demand for a commodity is represented by the equation P = 10 - 0.2 Q d, and supply by the equation P = 2 + 0.2 Qs where Qd and Q s are quantity demanded and quantity supplied, respectively, and P is the Price. Use the equilibrium condition Qs = Qd
1: Solve the equations to determine equilibrium price.2: Now determine equilibrium quantity.3: Graph the two equations to substantiate your answers and label these two graphs as D1 and S1.4: Furthermore; assume the demand for this product increases because of a change in income.A: graph the new demand curve and label as D 2.B: What will be the new equilibrium price and quantity compare to the initial one.C. Is this product normal good or inferior good?
Financial Statement Analysis and Preparation
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