Derive reduced form equations for equilibrium price

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Reference no: EM131481804

Question: 1. In a competitive market

q_s = -12 + 0.3p and q_d = 80 - 0.2p + 0.1a

where a is the price of an alternative substitute good. Derive reduced form equations for equilibrium price and quantity and use them to predict the values of p and q when a is 160.

2. A per unit tax t is imposed on all items sold in a competitive market where

q_s = -10 + 0.5p and q_d = 200 - 2p

Derive reduced form equations for equilibrium price and quantity and use them to predict the values of p and q when t is 5.

Reference no: EM131481804

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