The quantity of coffee demanded, QD, depends on the price of coffee, P , and the price of tea, P . The quantity of
c T
coffee supplied, QS, depends on the price of coffee, P , and the price of electricity, P , according to the following
c E
equation:
QD = 17 - 2 P + 10 P
c T
QS = 2 + 3 P - 5 P
c E
a. If the price of tea is $1.00 and the price of electricity is $0.50, what is the equilibrium price and quantity of coffee?
b. What is/are the endogenous variable(s) in this model?
c. What is/are the exogenous variable(s) in this model?
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