Equilibrium quantity of widgets

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The following represents demand for widgets: QD = 680 – 9P +0.006M – 4PR, where P is the price of widgets, M is income, and PR is the price of a related good, the wodget. Supply of widgets is determined by QS = 30 + 3P.

A. Assume that in 2010 M = $15,000 and PR = $20. The 2010 equilibrium price of widgets is

B. The 2010 equilibrium quantity of widgets is

C. Now assume two events occur in 2012: income drops to $13,000 and supply conditions change such that QS = 50 + 3P. Solve algebraically for the new equilibrium price of widgets after these two changes.

D. Solve algebraically for the new (2012) equilibrium quantity of widgets after these two changes.

Reference no: EM13917181

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