EXERCISE – ECON301_CH2
1. Suppose the demand curve for a product is given
by Q = 300 – 2P + 4I, where I is average income
measured in thousands of dollars. The supply
curve is Q = 3P – 50.
a) If I = 25, find the market clearing price and
quantity for the product.
b) If I = 50, find the market clearing price and
quantity for the product.
c) Draw a graph to illustrate your answers