Problem:
Assume that the demand and supply functions for the good X are Qd = 50 - 8P
Qd = -17.5 + 10P
Required:
1. What is the equilibrium price and quantity?
2. What is the market consequence if price is $2.75? What do you expect to occur? Why?
3. What is the market consequence when price is $4.25? What do you expect occur? Why?
4. What occurs to equilibrium price and quantity when the demand function becomes Qd = 59 - 8P?
5. What occurs to equilibrium price and quantity when the supply function becomes Qd = -40 + 10P (demand is Qd = 50 - 8P)?