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P the price of the good ps the price of a substitute pc

The demand for a particular product is given by

Q^d_x= 1000 -20P_x + 10P_S - 10P_C + 6M

The supply for that product is given by

Q_x^s = -180 + 40P_x -40C

P = the price of the good; PS = the price of a substitute; PC = the price of a complement; M = the consumer's income; C = the marginal cost of producing the good.

Suppose P_S = 5; P_C = 8, M = 25, C = 20.

-Calculate the equilibrium price and quantity in this market.

Now suppose that the price of a substitute rises to 11.

-Calculate the new equilibrium price and quantity.

-How does the price and quantity compare to the original price and quantity?

-How does the increase in the price of the substitute affect the demand for the good?

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Business Management: P the price of the good ps the price of a substitute pc

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