Would the equilibrium quantity increase or decrease

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Reference no: EM1313446

Q. Suppose which the demand also delivery functions for good X are as follows:

QD = 75 + (.004)*M - 4*P
QS = -43 - (.4)*(PI) + 3*P

a. Is this good a normal good or an inferior good? Explain how do we know?
b. Is the sign correct on the coefficient in front of PI? Explicate why or why not?

Now...
Suppose which M = 50,000 also PI = 80.
c. Illustrate what is the equilibrium price also equilibrium quantity?
d. If a price of $40 occurs in the market, rather than the equilibrium price which would have a surplus or a shortage? Of Explain how many units?
e. If a price of $60 occurs in the market, rather than the equilibrium price which would have a surplus or a shortage? Of Explain how many units?
f. If the value of M increased from 50,000 to 60,000 also nothing else changed which would equilibrium price increase or decrease? By Explain how much? Would the equilibrium quantity increase or decrease? By Explain how much?

Reference no: EM1313446

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