If demand is represented by Qd = 50 -.5P +.005I where I=$50,000 and supply is represented by Qs = 100 +.4P - 2W where wages=W=$15.00, compute the equilibrium price and quantity. where wages=W=$15.00, compute the equilibrium price and quantity. What happens if income falls to I=$40,000?

Question

Quizplus · Accepted Answer

The Answer is The equilibrium price is $255.56. The equilibrium quantity is 172.22. When income falls to $40,000, the new equilibrium price is $200. The new equilibrium quantity is 150.

If Demand Is Represented by Qd = 50 -