Equilibrium Price and Output
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Demand for flower bouquets in a suburban town is described by: QD = 50 - 5P + 2Y, where Q is quantity, P is price per unit, and Y is an index of consumer income. Similarly, supply is described by
QS = - 5 + 10P.
a) If Y = 100, what is equilibrium price and output?
b) If Y rises to 122.5, what is the new equilibrium price and output?
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Solution Summary
The expert examines the equilibrium price and output demand for flower bouquets. Step-by-step solutions to both the questions.
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(a) QD = 50 - 5P + 2(100)
QD = 250 - 5P
QS = -5 + 10P
At equilibrium, QD = QS
250 - 5P = ...
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