I'm trying to figure out if this is a math problem. Can anyone help me with this???
We know that the quantity supplied is related directly to price. Assume that the following equation represents the supply of widgets (Positive 10 is multiplied by P.)
We also know that the quantity demanded is related iversely to price. Assume that the following equation represents the demand for widgets (Note negative 3 is multiplied by P and positive 2 is multiplied by I.)
Qd = 15 - 3p +21
The variable, I, represents the average income of buyers - an important determinant of demand (because when income rises, we buy more). Assume that average income equals $30 thousand (I=30).
1.In the market, what is the equilibrium price and quantity of widgets (assuming I=30)?
2. If the economy suffered a severe recession and average income fell to $23.4 thousand (I=23.5), what is the new equilibrium price and quantity of widgets in the market?
Does this make sense to anyone?