Wednesday

October 22, 2014

October 22, 2014

Posted by **Jackie** on Tuesday, September 18, 2012 at 12:11pm.

a. If Y is 10 and Pf is $1, solve mathematically for equilibrium Q and Pb. (Hint: substitute all exogenous variables into the equations and set Qd = Qs to find equilibrium Pb first and then subsitute back equilibrium Pb to the equations fo find equilibrium Q)

b. If the average income in the town increases to 15, solve for the new equilibrium Q and Pb.

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