In the Market for Good X, Demand Is Q^D =

question 105

Essay

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300.
a. What are the equilibrium price and quantity?
b. Solve for the inverse demand and inverse supply equations.
c. Suppose that an increase in consumer income makes consumers willing to pay $500 more per unit of good X. Also, a technological breakthrough in production makes firms willing to sell good X for $500 less per unit. What are the new equilibrium price and quantity?

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