Question: 1. In a competitive market
qs = -12 + 0.3p and qd = 80 - 0.2p + 0.1a
where a is the price of an alternative substitute good. Derive reduced form equations for equilibrium price and quantity and use them to predict the values of p and q when a is 160.
2. A per unit tax t is imposed on all items sold in a competitive market where
qs = -10 + 0.5p and qd = 200 - 2p
Derive reduced form equations for equilibrium price and quantity and use them to predict the values of p and q when t is 5.