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Unformatted text preview: or stay the same? Price will increase. c) (4 points) What is the equilibrium price and equilibrium quantity in this market? P* - 25; Q* = 15 3. (4 points) What will happen to the equilibrium price and quantity of a good if: a) The price of a substitute good increases? This will cause the demand for the good to increase which will cause P* and Q* to both increase. b) There is a decrease in the number of firms which sell the good? This will cause a decrease in supply which will cause3 P* to increase and Q* to decrease....
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This note was uploaded on 12/18/2008 for the course ECON 302 taught by Professor Kurrejamesantho during the Fall '08 term at Pennsylvania State University, University Park.
- Fall '08
- Price Elasticity