I don't entirely remember how these concepts go; the information is muddled by a few other topics. The question is listed below, word for word.
The demand and supply for a good are given by the linear functions
,
,
whereis the quantity demanded,
is the quantity supplied,
is the price, and
is the aggregate consumers' income, which is exogenous. Denote the equilibrium quantity by
and the equilibrium price by
.
(i) Find the effect of a change in income on equilibrium price and quantity, that is,and
, by the method of implicit differentiation.
(ii) Check the result by first solving for the equilibrium price and quantity explicitly and then findingand
.
(iii) Repeat (i) and (ii) for the following demand and supply functions
,
,
with.
I'm doing my best to try and remember how this all works, but some help on the subject would be appreciated.


LinkBack URL
About LinkBacks