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The demand and supply equations for sweatshirts (the basic grey kind) are as follows:
Qd = 10,000 - 250P
Qs = -4,000 + 1,500P
a. Solve (using the Demand and the Supply functions) for the equilibrium price and quantity.
b. If the current price of the product is $12, what is the quantity demanded and the quantity supplied? How would you describe this situation, and what would you expect to happen in this market?
c. If the current price of the product is $4, what is the quantity demanded and the quantity supplied? How would you describe this situation, and what would you expect to happen in this market?
d. Assume the supply function/equation changes to:
Qs = -2,500 + 150P
Does supply increase or decrease? What is the new equilibrium price and quantity?
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