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?© BrainMass Inc. brainmass.com March 21, 2019, 10:20 pm ad1c9bdddf
Let's first plug in I and W
Qd = 50 - 0.5P + 0.005(50000) = 300 - 0.5P
Qs = 100 + 0.4P - 2(15) = 70 + 0.4P.
This solution shows how to calculate equilibrium price and quantity in the context of the given questions.