In Question 1, suppose there is a simultaneous shift in supply and demand caused by an improvement in technology and a growth in incomes. The technological improvement is represented by a lower supply curve: P = 10 + 2Q. The higher incomes boost demand to P = 76-4Q.
(a) Draw the new supply and demand curves on a diagram and compare them with the pre-change curves.
(b) Equate the new supply and demand functions and solve for the new equilibrium price and quantity.