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Unformatted text preview: by Q d = 10 – P + I , where I is the level of consumers’ income. a) Suppose I = 20 . Graph the supply and demand curves and find the equilibrium point. Find the equilibrium quantity and price using the equations. b) Suppose income rises to 24. Find out the changes in equilibrium price and quantity. 4. Consider a linear demand curve, Q = 120 – 4P. a) What is the price elasticity of demand at P = 20? b) At what price demand is unit elastic (i.e. elasticity = –1)?...
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This note was uploaded on 08/30/2011 for the course ECON 300 taught by Professor Zh during the Spring '11 term at SUNY Albany.
- Spring '11
- Market Equilibrium