If Demand Is Represented by Qd = 50 -

question 3

Essay

If demand is represented by Qd = 50 -.5P +.005I where I=$50,000 and supply is represented by Qs = 100 +.4P - 2W where wages=W=$15.00, compute the equilibrium price and quantity. where wages=W=$15.00, compute the equilibrium price and quantity. What happens if income falls to I=$40,000?

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Definitions:

Short Run

A period of time during which at least one of a firm's inputs is fixed, limiting its capacity to adjust to changes in demand.

Rent

A periodic payment made by tenants to landlords for the use of land, a building, or other property.

Supply Curve

A curve that illustrates the supply for a product by showing how each possible price (on the vertical axis) is associated with a specific quantity supplied (on the horizontal axis).

Demand Curve

The demand curve is a graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.