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Question 4. (15 marks) Suppose supply is given by q = 2 + p and demand by q = 10 – 2p. (a) Plot these curves with p on the vertical axis, showing the slopes and all horizontal and vertical intercepts. (b) Using the information from Question 3 calculate the equilibrium quantity and price. (C) Suppose the demand curve shifts such that q = 15 - 2p. Compute the new equilibrium price and quantity. Show this on your graph.

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19 Dec 2017
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A. consider a demand curve of the form
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B. Now suppose at each price that individuals demand four moreunits of output--that the demand curve shift to Qd=-2p+24
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Assume that you have a budget of $30 to spend on milk and cereal only. The price of milk is PM = $5 and the price of cereal is PC = $3.50.

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2. What is the most you can purchase of cereal?

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